You are correct, all dragon upgrades are mostly useless, which is why dragons are only useful for a very narrow period of time (th7-th8), and it's why a TH7 is able to 3* weaker TH8s with relative ease. The only reason I upgraded my drags to level 3 was to get a bit farther into the stronger TH8s. If I ever upgrade to level 4 dragons it will only be for donations, and I don't see any reason for someone in a level 5 clan to ever upgrade to level 5.
I've suggested many times that dragons should be nerfed at the lower levels and buffed at the higher levels. This would make it more of a challenge for TH7s to 3* other TH7s with mass drags, and might make them more usefull to the higher TH levels.






