Get a ton of ranged people and blast the thing!
Method 2: Method 3: PS Spellcasters with one point of mana count as ranged, and pretty good ones, too. I'm not sure if they count with no mana. Experiment! Happy slaying.
Get two ranged units, one better than the other and with the strike ability, and leave them out of the dragon's range. The dragon should move so that it can hit the better one with breath. If it can hit both, move them so that it can only choose to go after one. This one should be kept so that the dragon can't hit it, but can get within range. The dragon will ignore the other, but sometimes will breathe on the other if given the chance. The weak one should keep hitting until the dragon dies.
Get a strong unit with a ranged attack. Keep it outside the dragon's breath range but inside the dragon's movement range. The dragon will attack. I did this with Sister Tersia with casting 1 and a lightning wand. I used neither and she didn't take a hit.