I know I'm zombifying an old thread and I'll admit, even a bit repugnant, but after reading the logic in some of these comments, I felt a juxtaposition was necessary.
For those that legitimize their decision to kill the dragon based upon it being a "vile, murderous monster" and that they would be "sacrificing an innocent" so that the Master could be free really didn't bother to think about the situation in it's entirety (and in one instance, didn't even bother to explore the suggested "victims" background at all).
Here we have a Dragon that has existed at the bottom of a dungeon for 2,000 years, quietly consuming the souls that have funneled in to the adra while working to ensure that it is safe from molestation. While the logic maybe that the souls of those that have passed should remain unmolested, it should be noted that they didn't disappear, but occupy a single entity. More poignantly, there seems to be no issue with consuming the various foods in the game with little more thought about how many thousands or millions of cattle, chickens, fish or otherwise needed to die in order for them to have their "Casità Casserole" baked to perfection. In some cases, some even go out of their way to find even intelligent species to consume, a R/L analog being the consumption of octopii, whales and primates.
Further, what makes this dragon a "monster" is simply the perception we have upon what it's doing without questioning our own actions in the same light. Living beings eat, intelligent or not. Living things protect themselves, intelligent or not. It didn't go roaming the land looking for small children to devour, ya know, 'cause veal. What's more, the option to install the soul of Sefyra in to a "Dragonslayer", or from the dragon's perspective, a "Murderous, Vile Monster" who's been hunting and killing the children of her kind down for years in order for the Dragonslayers kind to occupy the now cleared area.
I wholly applaud the fact that Obsidian put in the option to free Sefyra from her prison. This could have simply been a kill mission, but instead was a rather ingenious way of pointing out the hypocritical nature that we as a whole tend to have when it comes to what we perceive to be a threat or weakness.
I say screw the murderous paladin and free the dragon.
**edit**
Falanroed is not a Paladin, but a wizard as evidenced by the Grimoire she drops if you simply kill her for her gear.
