I was looking at the pictures of the dragon and I read the other guys 
theory. I think that it was invented by Tails and them captured by 
Robotnik and reprogrammed to fight Sonic and Tails because in both of
those sceenshots it appears they are fighting(ecspecially the second 
one because the monster looks like it is rearing back like most bosses
do when you hit the or they are about to attack). This fight probably 
took the place of the fight against the Egg carrier but then later it 
may have been dropped because it would have been kindof weird if Eggman
just let them land on his ship and if they added the other eggcarrier 
fight then there may have been to many levels. Also It may have been 
dumped later on because it didn't really fit the storyline/game. Well 
that is all I have to say for now.

TLSPRWR