If the player character really transforms into a dragon, it might be better to have him become a young and inexperienced one or even a hatchling, without any powerful skills. This dragon might still need to learn how to breathe fire and how to use those mighty attacks that make people fear older dragons. Its scales might still be soft, so standard archers would be a danger not to be ignored. I think this would provide more interesting challenges, at least if you are able to transform early in the game.

That would be cool, like you get the form at a rather early point in the game, but it's still weak, your dragon form would only know about 2-5 skills and by gaining xp, your dragon form becomes stronger, being able to use more powerfull attacks.
And if it would be confirmed that we would be the dragon by one of the Larians, we could think of some skills! Like I remember this skill from LotR: Battle for Middle-Earth 2 that made a dragon flap it wings above a certain area, and everyone beneath it was trown away into the air and fell back on the ground, taking damage and being stunnend for a few seconds. that would be a really cool skill to use on archers and such, and especially usefull for young dragons(because their scales are still soft).
Ofcours if the dragon changes in appearence, will it only be it's size? or will it show signs of aging? but what is the point of creating a dragon with a certain color, certain wings,... if it becomes tottaly different after a few levels?