If I'm flying as a dragon, I want to be able to torch enemies on the ground
So do I! And if the graphics is a bit lower quality because of it, then I'm happy to pay the price. Gameplay is always more important than graphics...
While it's a nice feature. It would eliminate a reason to travel on ground apart from when entering caves or towns. I actually didn't think much of the dragon feature. If we're going to be a dragon, we should at least have the freedom of one to fly over mountains or over the seas. For example, you can spot your battle tower from the Orabas Fjords, I don't see why we couldn't fly to it but apparently, there's an invisible barrier blocking our path to it and another invisible barrier that prevents us from flying over mountains.
If the game was open world and not just a world where you are free to explore, then a dragon form would suit better. To fly through the clouds and then change into human form and watch your character fall from such a height unharmed while admiring the views of an open world would be memorable.
I thought that's how the dragon was going to be like but sadly not. The Black Tower battles were good though and certainly added a need to transform both into human and dragon forms.