I tend not to think of these sets as part of any particular faction. They may come with a particular torso or shield, but they seem to be more 'hero characters' than anything else. If that makes sense. So I don't consider the dragon to be an oddity. I actually wouldn't be surprised to see another set like this with a KK2 character. Maybe a Red or White dragon this time (maybe eventually we'll get the whole D&D dragon catalogue, haha).
I have two of these sets. Got them on eBay -- 3 dollars a piece. For 6 bucks, it was worth it. Two dragons, two complete figs, etc.
My only gripe about this set was the halberd. I strained my brain for about 15 minutes trying to figure out how you use a halberd with one hand from the back of a dragon. I decided it's impossible and that the halberd was a silly addition probably made solely to distinguish this set from the very similar Batlord set.
I gave the halberd to a foot soldier and gave Cedric a spear, I believe, maybe a lance or a sword - I don't remember.
Great army builder, on par with the other single-figure sets. Nothing sets it apart, for good or ill.