Your post reminds me of the time I went to a fossil exhibit and saw a cave bear skeleton standing on it's back legs. It looked eerily like a giant human. Had the head not been there, I can easily see how a farmer or hunter/gatherer could mistake it for a giant's skeleton.
I couldn't say for sure, but my feeling is that the dragon myth originated from dinosaur fossil finds. People who are not familiar with the anatomy of any animal can envision a multitude of things - most of them wrong. Show a plesiosaur skeleton to someone who's never seen one and then have them draw what they think the animal might have looked like alive - I bet someone would draw somthing resembling a dragon.
But I agree with the gist of your post.