Alright
(tl;dr at the bottom)
I tried the dragon a few times and ended up having my ass handed to me every time. That breath attack or whatever it is just murdered my entire party. So, I read a few strategies and thought to give them a twirl and that was about as successful as charging a rhino armed with a toothpick.
My party consists of my warrior PC, Aloth, Durance, Edér, Kana and a custom rogue which, while her mech and stealth skills are sufficiently high (11 and 5) and she's got a nice bow allowing her to pick off enemies from a safe and comfortable distance, has about as much health and endurance as a raspberry, and a rather small one at that. Xaurips can kill her. With one arm tied behind their back. The good hand. You get my point.
I did the whole "go-trick-the-dragon-hunter-and-double-cross-the-dragon-for-the-kill-dragon-skill" thing but that didn't help much since the dragon, even while wounded and exposed, would simply huff and puff and blow my entire party into next week. But it did help some. I managed to get the dragon down to about 50% HP.
My final attempt went anything but well.
I did the "sneak-past-dragon-and-kill-Xaurips" thing, dragon comes stomping, party runs away like Arthur and his kniggets, Kana summons Drake the drake (I named it Drake), party spreads out and the dragon finally catches up. the first few seconds went according to plan which is to say everyone started running around like morons doing anything except what I instructed them to while the dragon was having Drake the drake for an appetizer.
My PC landed the scale attack on the dragon, Durance and Aloth both hurled their strongest spells, Edér was lining up as main course and the rogue was hanging back slinging arrows at the scaly beast and then the inevitable retaliation happened.
Left standing was Kana and the rogue so now a merry game of ping pong ensued where Kana would kite the dragon north towards the hoard and then the rogue would kit it back south again and this went on for a while while I pondered my alternatives (which were, to be honest, not great and most of which included reload and retry) since neither Kana nor the rogue even attempted at wounding the dragon.
And now, of course, chance intervened and Kana in a brief moment of brilliance and skill chose to summon skeletons which meant that the dragon could catch up and roast him and his weight watcher friends like kebabs. Lest standing was my dear rogue, the scourge of nothing and feared by none. But that aside and with boots of speed, kite she can do very well.
So well in fact that she kited the dragon all the way back up to the wider cavern where you first encounter it all the while shooting at it and scoring the odd hit every now and then. Here I briefly considered returning down the path to the hoard but though better of it since I wasn't sure I would be able to wheel around the dragon and return without suffering the same charbroiled fate as Kana did so instead the little rogue began running circles around the nasty dragon.
Truly, a David vs. Goliath "fight" ensued with the rogues running in circles taking potshots and missing probably 7 out of 10 shots (thank goodness for Deep Wounds) and the dumb dragon stupidly turning on the spot trying to, honestly I don't know what, but attack it didn't. So heart pounding and hands shaking I led the rogue in clockwise roundabouts and, taking great care to fire only when the cooldown was 0, firing once every half-lap. It took about 10 minutes or so but finally the dragon succumbed to the deep wounds cause by the relentless hail of arrows and died.
And what do you get? Dragon scale. I mean, seriously, there's a giant hoard of gold not 100 yards away and the only things you get are scales? Come on!
Anyway, in conclusion, I would not recommend this (lack of) tactic but it was too fun not to share.
tl;dr: The dragon kept pwning my party but finally I managed to kite the dragon in a great big circle with my last (wo)man standing, a tiny, weak puny rogue who sniped the dragon while running and managed to kill it, lulz all around
