This some real threadnecro here, but i thought i'd leave my findings for anyone else wondering about this:

After leveling up, save the game immediately and now you have several options.

1: stand still, get an green dragon
2: move about lots, likely get an bone dragon
3: change zone (i walked from montero to the bridge), get a red dragon
4: change island via boat, get black dragon.

Not sure if this is 100% but its been like this for the last 6-7levels for me atleast.