You can still do dragon fights easily with Sprites and Lake Fairies. I did all the fights in LotD this way. The trick to avoiding large losses is to simply put vulnerable units all behind Ice Thorns. If you put 4 vulnerable units at the edge of the combat map, you can still cover them all with clever positioning. The only unit I had outside were Green Dragons, usually. Inside, I put units like Inquisitors, Hunters, Dryads, etc. My Sprites and LF's just sat out in the reserve slots for these battles. Besides a Time Back and/or a Resurrect from the Inquisitors, I never had to do much in terms of restoring losses.
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