I highly doubt complicated animations lag Blockland in the least, and monstrously huge vehicles also don't seem to lag blockland all that much (see Blimp vehicle)
The large amount of different animations would be difficult I imagine, maybe the dragon could be a player character vehicle (like the horse) with it's own set of dsq animation files, but then could it "fly" and pitch and yaw and do all those aerobatic things Flying Vehicles do?