[X] Seal him in a less imposing physical body, with his powers sealed as well (somewhat harsh, renders him almost completely harmless while still giving him physical freedom. Implement chibi Dazarel).
[X] Seal him in your own head. You will be his prison and his warden, and see what benefits you can gain from having a dragon chained in your body (x1.25, from, "ambitious." Middling harshness, Dazarel is as restricted as the inanimate object version but has you on hand for conversation and interesting experiences, renders him completely harmless, may or may not allow Kakara to exploit him for power).
[X] Seal him into an actual house cat, because you think it's funny.
-[X] With control of the body (middling harshness, Dazarel is restricted to hissing at things and scratching them. Means you could physically carry him during your day-to-day if you wanted without having to explain him to Garenhulders. Sacrifice a poor kitty).
[X] Seal him into an inanimate object. Sorcerers will be able to get him visitation, so he won't be completely alone, but he will be completely disabled (harshest, completely strips any ability to affect the world aside from talking to willing, un-captive visitors).
[X][RESOLUTION] Consult the sorcerers for their opinions on magic solutions (next update has a vote on the various options the sorcerers present).
-[X][RESOLUTION] Interrogate him.
--[X][RESOLUTION] Try to secure his cooperation with your decision on what to do with him.