Well, this is getting awkward. Seems to kill the dragon you either need to be like 60%+ and carry a potion, or a divines.
The dragon should have either a nerf or different spawns. Either it doesn't appear when the stability is too low (happened to me..actually killed it, but I needed like 2% more to reach the shrine), plus it should not appear if the player is below 50% health and has no divine or potion.
Also, once you hit max armor, the blacksmith ought to be able to repair you, meaning he heals for the same prices- increases as with armor as well. You lack the option to buy potions otherwise, and coming across a shop that is of no use just is annoying and removes the odds of getting a potion shop I think.
Lastly, the freaking dragon keeps spawning AFTER I am forced to use my divines because my hp is too low and I had to get a potion/kill the creat. I would suggest increasing the odds of encounting an armorer (who also can heal once you have max level) when you have one.
The biggest issue is fame. Even if you have lvl30 with the highest weap, you need like 2 of them AFTER winning the tourney just to satisfy fame. Fix it. Add it for quests, or lower the require..or up the fame by tourney.