Area attacks shouldn't take penalties for not having line of sight, as they don't need it. All they need is line of effect. You do need to guess which squares the dragon is in, but if you guess correctly you're attack won't have any penalty.
This is one situation where wizards are handy.
Thanks for the clarification!One) Technically, the term is close attack for a thunderwave. Close attacks don't take penalties for not having LOS; whether it is a blast or burst is irrelevant, only if the attack is Close or Area.
Two) You only have to guess when LOS is important (melee and ranged attacks). With a close (or area) attack, you only need to include one of his squares in your attack, which may or may not involve guessing, but you do not need to explicitly nominate his square.
OK, but all it needs to do (once its power has recharged) is make it black where _you_ are and charge into the fight. As much of the party would be either completely ineffective (defenders) or largely ineffective (everyone other than controllers) I just don't see how you can win this fight. Plus it goes forever.