per the rules you quoted, the dragon would safely fall its speed (depends on the dragon), and if it didn't land, then it falls to the bottom of the pit instantly. The rules seem to not take into account terminal velocity, speed of a fall, etc.; there is no way provided to adjudicate any distance so far you won't land in the same round you fall... so it is assumed you are instantly on the ground.
Of course, it is very common to house rule some form of maximum falling distance per round; though if a human in 'freefall' position (trying to slow the fall) were to instantly hit terminal velocity, it should fall about 1,050 feet (210 squares) in a 6 second round. This ignores acceleration, and various other factors such as position or shape of the body (which would alter the terminal velocity of the falling body). Because of all of that (figuring acceleration from 0 to terminal velocity, needing to know the shape/position of a body to calculate its terminal velocity humans can easily move from 120MPH to 200MPH terminal velocity by pulling their limbs in, and the world record freefall terminal velocity is somewhere around 600MPH if memory serves), it is probably best to avoid hyper-realism and just go with a generic valuse your group feels is appropriate.