Save before approaching / talking to the dragon (to the far east and north of the village). He can give you an item and teach you a skill if you play your cards right.
There is a potentially powerful sword in one of the houses near the village.
If you get tired of hack-and-slash, you can head straight for the south east corner, and once inside can run past most of the opponents on your way to the Black Ring member buildings.
Josephine, generally considered one of the toughest opponents, is to the far left once you enter the Black Ring dungeons. You may wish to explore the paths from right to left, to deal with her last.
When you approach the poison swamp you can step briefly into shallow areas and just take damage, rather than being killed, but once past the swamp onto the island, there is no such 'safe' region.