Short version: Have you heard of Brexit? The US Civil War? The Feudal Ages in general?
Having countries within countries is a volatile situation.
Long version: We want the Imperial Trust to be a unified polity. We want everyone within it to think of themselves as first and foremost members of the Imperial Trust and only consider regional or planetary allegiance a very, very distant second. We also want one set of constitutional laws that covers everyone. If we make exceptions for the Dragons then we will be all but forced to make exceptions for others. We would end up with a convoluted, territorial, internecine mess.
If we wanted to integrate Dragon's Nest without destabilizing the Trust we would essentially need to lift the High Council up a layer and create a 'regional authority' for the Trust's current holdings. Except that Dragon's Nest is vastly larger than the current Trust and the high council is made up of planetary governors. We would need to break the Nest up into smaller chunks anyway.
Frankly it would be easier to start from scratch, dismantling both polities to make a unified one.
@Durin
1 Does Lin have an opinion on the merger proposal?