I have an idea for how to deal with the dragon, assuming it has a Grudge of sufficient severity on it.
Ok, so it's been proposed before to gank it in its sleep. My plan is basically that, except we loudly wake it up and declare that we are exacting Vengeance upon it in the name of the dwarf race before we gank it. The purpose of this is to get more dwarf favour from killing it. As for pulling it off, it'd be pretty easy. Just go invisible and teleport above its neck in the air, then decapitate it while we're falling down, and regenerate our broken legs (and possibly back) with the Seed after we land. After that it's just a matter of celebrating by cracking open an ice dragon blood-cooled cask of ale with the boys.
The only thing I can see going wrong with this plan is that ice dragon blood isn't actually cold enough to get ale cold enough to be named after New World dinosaur mounts, so we should probably contact the Ice Witches of Kislev first just in case.