Well you can spend points and wear items for your dragon form , when you are in dragon form (after you get the ability to use dragon form anyway), which you can use usually when you are not in an anti-dragon zone and have enough space to turn into a dragon, though in flames of vengeance you can't dragon form until the climax of the game for story reasons.
Usually I use dragon form just for quick travel, also ground npcs vanish when you are in dragon form so you can't do fly bys and set everyone on fire.