Dragons - How did they come to be?

[Raynor]

Originally Posted by Legate of Amon Lanc

I don't think so and I believe everything that is anywhere written contradicts that. Balrogs may have used to be able to change their forms, but not after they were corrupted by Morgoth (like Sauron could no longer appear fair after he created the One Ring). In any case, dragons were not Maiar, and certainly not Balrogs.

Bilbo was quite able to talk riddles with a dragon, something I doubt he could have achieved with a balrog - as I would expect a balrog in dragon shape to retain one of his chief weapon - fear.

Furthermore, from the letters:

Originally Posted by Letter #144

[The balrogs] were supposed to have been all destroyed in the overthrow of Thangorodrim, his fortress in the North. But it is here found (there is usually a hang-over especially of evil from one age to another) that one had escaped and taken refuge under the mountains of Hithaeglin (the Misty Mountains). It is observable that only the Elf knows what the thing is - and doubtless Gandalf.

And we know from the Hobbit that in 2770, TA:

Originally Posted by An unexpected party

There were lots of dragons in the North in those days, and gold was probably getting scarce up there, with the dwarves flying south or getting killed, and all the general waste and destruction that dragons make going from bad to worse.