To determine exactly when you are using your last-ditch dragon effort could be tricky.
a) When population hits 0 (although you could have thousands of recruits)
b) When population and units hits 0.
b+) When the sum of population and recruits is not enough for a dragon to spawn.
c) When population and units runs out and you cannot reclaim recruits by disposing of non-essential structures.
... but that would mean you were out of buildings, which normally means you have lost the battle.
The main disadvantage of (b) is perhaps that you would have to wait for the population to dwindle before spawning.
What I think might be easier:
Allow dragon spawning to happen as long as you have at least 0 recruits, and allow the number of recruits to be negative. This is most significant at 2 points:
1 - When dragon is first ready I sometimes have 0 recruits because I'm building structures and producing units. I have to halt new activities and wait, and then morph to dragon.
With this trick, I could instead morph to dragon, and then halt new activities (restore recruit deficiency and then get enough recruits for your production). Slight advantage to dragon, probably not a problem. Maybe even a bit more fun.
2 - When the population is bled dry, I can still morph into dragon, unless I have already morphed without support of sufficient recruits, in which case I first need to reclaim recruits somehow. If I can't get more recruits, and already have morphed my recruit count into negative, I'm stuck/it's the end.
It would effectively be almost, but not quite, the same as what was originally proposed, and I think it does away with the complex determination of actually-out-of-recruits situations quite nicely.
I think what sven meant on the population was the number inside the parenthesis (IE 10000 (0)) during RTS. It could be disadvantageous for the person who is an expansionist on its recruitment center because his maximum allowable recruits could deplete fast and have this handicap in the earliest.
In theory, it could balance out the expansionist/conservative type of play which is good. I don't know the consequence in practice though especially after applying the skills of the dragons.