Part II (Part I is here)
Continuing the question: will it breathe fire?
I threw out the idea of fire-breathing being a mating display, as there isn’t any biological need for a creature to breathe fire. Let’s put aside the question of why and look at how.
One commenter brought up hydrogen gas, which has the double advantage of being both flammable and lighter than air — it can be used to lighten your dragon for easier flying, whether by storing it on hollow bones or a gasbag (like a bullfrog’s throat pouch, or perhaps by going all the way to designing a zeppelin-like dragon).
However, hydrogen gas isn’t as common in nature as one might hope. Generating it by splitting water is simple — if you have electricity. Electricity-generating organs do exist in nature, of course, but most of them generate only mild fields. A small, specialized organ generating enough current to split water into component gasses could work, given a ready supply of water and enough metabolic energy to generate enough gas.
Hydrogen can be produced by some forms of algae (there has been some research on that in the bio-fuels field) but those require sunlight and the inside of a dragon is notoriously dark (or can you fix that?) Some sort of symbiotic microbe in the dragon’s gut, generating hydrogen from yesterday’s lunch, may be your best bet — your dragon gets his gas with minimal effort.
One more side note: no need for your dragon to eat rocks. Hydrogen is everywhere. It’s just a matter of separating it out.
Far less sexy than hydrogen, admittedly, but methane has the advantage of being easy to generate using existing microbes. It’s generated in the gut by bacteria which require neither light nor air, and could be accumulated in a specialized organ for siphoning back toward the head for ignition.
Or, you could be really brave and let the methane continue on its way to be expelled in the usual manner with a less-than-usual ignition organ under the tail… so that both ends of your dragon are equally dangerous… hey, it could still be a heck of a mating display.
And a non-flammable option
Hydrochloric acid, as produced in the stomachs of meat-eating animals, is quite able to burn exposed skin and eat through fabrics. More potent acids like sulfuric or nitric acid aren’t produced biologically but if one can invent a tough enough organ to store the stuff, I think it could be made quite plausible.
Unlike fire being a mating display, acid spraying makes more sense as a defensive mechanism along the lines of secreting surface poisons or explosive defecation. An acid-spraying dragon may well be short on the fangs and claws and other armaments, eat things that don’t need intensive hunting and killing, and be subject to predation by bigger, scarier monsters.
Which could be just as interesting as your standard-issue dragon, of course.