Dragons dont need more health, I checked using the console. At level 14: Dragon: 700 hp, Giant 500. However they need more damage output, more armor, more magic resistance (as well as fire dragons being immune to fire (or 90%), etc), and resistance to poison, and other weakining effects. A couple of Spriggans dropped down a poor dragons health by nearly half!
I agree that they need to be made more rare, but after all, you also need them to spawn to unlock dragon shouts.
I'm make a mod for myself and try and balance things out, see how it turns out, maybe I'll release it. (If someone doesn't do it before ime

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As someone said above, maybe I'll make each dragon a named one, and they have their own territories.