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Glaurung could just fly up in the air and breath fire at Gothmog
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Well, Glaurung could not fly, but some dragons could.
There is one point when Voronwe and Tuor are passing the Spring of Ivrin where Voronwe says that Glaurung was the "most fell" of the servants of Morgoth. Glaurung is the most prominant of the Morgothers in the Wars of Beleriand, after Sauron went into hiding.
The attack of Ancalagon the Black and the other winged dragons drove back the forces of the Valar, but that may have been due to the shock of seeing flying dragons.
On the whole the dragons seem to be more feared by the Elves, or at least more prominant in the stories.
However, Balrogs seem to have been something of the guard of Angband, so they would not be free to rampage about and reek havoc across the lands like the dragons were.
I guess at the moment I'll cast my vote for dragons, but I reserve the right to change it at a moments notice. [img]smilies/wink.gif[/img]