I think the dragon spirit is pretty good actually. Just like fighting in human form, this game requires that the dragon dodge and maneuver around attacks. I don't often use dragon spirit cause I try to avoid the attacks. It can be challenging when there are tons of flying drakes and towers blasting at you, however you also have some cool abilities. Granted I play on Med difficulty as appose to hard.
Try summoning the ally dragon who does a pretty good job of diverting enemy fire from you.
If you are low on health fly away and recharge or switch between human/dragon and use both healing spells since they are both on different cool downs.
I mostly use that AOE blast to kill almost all the annoying drakes around me
For towers/buildings, I use flame breath while I circle around the tower, they are usually down within 2 sec and hardly ever hit me.
There is a shield ability that you can try, but I never felt the need for it.
I think the develop felt with all the other dragon skills, the dragon becomes pretty strong as is and does not need a better Dragon spirit ability.
