[suggestion] Dragons must fly!
Search your heart Stardock... you know it's true. Look at Elementals own intro screen.
Dragons should either hover in the air above their tile, or fly in a radius around their tile. On the strategy map, flying units--other than graphics and animations changes--simply means it can occupy the same tile as a land unit or structure, and can cross tiles that land units cannot, and probably travel faster than land units. Mounting a sovereign on a dragon would be cool but optional for now.
In tactical combat, dragons could cast special abilities from the air, and be susceptible to archers and cataputs, but would have to land to engage in melee combat, or to be attacked by melee. To balance things, they could suffer a penalty from ranged attacks while in the air.
I'd also dump the squads of dragons idea. Fitting four dragons on the same tile looks pretty sad. If a unit is so large that they have to be scrunched together to fit on the same tile, then just allow one unit per tile and balance from there.