And Dragon Dance would make more sense as a taunt rather than as a special. As for an ability, he should have Multiscale. The actual ability halves damage dealt to Dragonite when he has full HP, so when he has 0%-50% damage, he can take half of what he normally would???
I think that Dragonite should have "multiscale" as an ability. So that when he is at 0% damage, all attacks do less to him. then one of his taunts could be Dragon Dance which increase attack and speed. For his Forward Smash, Dragon Claw would be epic. His Final Smash could be Outrage/Draco Meteor.