There are some great ideas in here. I particularly like the idea of using the Highlands as a Dragon realm. It's a bit too Nerf just now, and the dragons would love to hang out in the mountains, I bet. Here's my thought: How about if characters from the Dragon expansion could CHOOSE to draw from the dragon decks, instead of the Adventure? The best way to make this fair would be to draw from the BOTTOM of the mixed dragon decks, so you're never sure of the colour of the card you're about to draw. Kinda like in Fury of Dracula. That way you could take advantage of the powers that don't make sense without the dragon cards. In defeating a dragon, any character could gain a dragon scale, which would provide the normal +1 bonus against the Dragon King (I also like the idea of just choosing one at random and sticking with it). The character would have the option of either going for the CoC, which would require a Talisman, or else heading for the Dragon Tower (an addition I really like....never thought of making it optional before). You wouldn't need a Talisman, but you could use the Crown token as your key to get in the tower. Anyone, of course, could take it from you. All the +1 tokens might make this an attractive alternative for people instead of the CoC.
In addition, I have custom made dice that I use for NPC movement. On a 3 or 4, they show a dragon result. Any character in the Highlands who rolls 3 or 4 for their movement would be required to take a Dragon card instead of a Highlands card. Adds a bit of danger and opportunity to the otherwise mostly-safe region. Of course, if they defeat a dragon, they get a scale, same as a Dragon character. And they could fight over the crown token. Maybe at the end of the Highlands you could choose to enter the Dragon Tower instead of facing the Eagle King? Or could there be another entrance to the Tower, maybe in one of the spaces in the Highlands near the end? Thoughts?