Have you tried just concentrating on the flying opponents for awhile? Sticking to Fire Sphere should keep you relatively safe if you keep moving. As long as you can kill opponents faster than the nests can spit them out you should clear enough to be able to take out the next nest without taking too much damage, after which you should be able to clear the remaining opponents faster.
The best defense is a good offense... maybe try a piece of armour that gives you a 40% offense bonus, rather than defense. If you are already taking out flying opponents with one Fire Sphere, this should at least speed up damage to nests.
You don't have to take out the nests all at once. If you start taking damage you can break off, fly away to heal and then return. They will start to regenerate, but you can heal faster.
The dragon's base offense and defense are equal to the character level. The base hit points and mana are equal to 760 plus 4 times the character level. The level also comes into play in the actual combat calculations.
