There were a couple of very slight errors in the original pattern which I’ve now corrected. When shaping the nostrils, Row 7 should read:
Row 7: K1, K next st picking up the wrap and knitting it with the st, WT
After shaping the first nostril it should say:
Repeat rows 2-10
Sorry about that.

20 November 2013
Another modification…
For the spikes, work Row 1 again before the cast off row for each spike, and after casting off, K to end. So, for example, first spike should read:

Row 1: K
Row 2: K1, M1, K to end
Rpt rows 1 and 2 until there are 5 sts on needle
Rpt row 1
Next row: Cast off 3 sts, K to end

Corrected PDF uploaded.

Background
Lara asked me to make a comfort blanket/blankie for her new baby. She wanted one with an animal head, but asked me to make it nice bright colours; not a giraffe, dog or elephant; machine washable; and, if possible, to make two of them so that she could put one in the wash without the baby realising! I found the gorgeous multi-coloured yarn in the Sheep Shop in Cambridge, but still hadn’t decided on an animal theme… Then it came to me - a dragon! I searched through Ravelry but could find anything that was quite what I had in mind, so I started improvising (and writing it down as I went along). I bought the plain coloured Rico yarns at the Ely Wool Shop, found a nice stitch (called “knot stitch”) to work the blanket piece so that it looks a bit like dragon scales, and then spent ages experimenting with different shaping techniques to make the head look right. The hands/feet are based on glove-making techniques, but much smaller, and the spikes were just improvised until they looked right. Because I’d carried the strands up one side of the blanket part, I decided to crochet around the edge to conceal them. I was thrilled with the way the first dragon came out, and when I came to make the second dragon I was very pleased that I’d written everything down…