The remarks from stevelabny are my thoughts exactly.
What makes it worse are the flaws of the folkhero PC, so if they RP him correctly he will be too arrogant to believe failure is an option.
Not only that, the players themselves might think it is possible.
They will probably have the videogame reaction of "Well, if it's there then it means that we can beat it."
I know that they should change this feeling but waiting for a TPK and then saying "Well, now you've learned." isn't going to make for happy players I think.
The dragon will probably kill them in round one so they won't have an oppurtunity to flee.
And even if they could then I think it would be a big letdown for the player of the Folkhero PC to be the only one with a goal that he/she can't really accomplish.
Ugh, this one is going to give me a lot of headache I'm afraid.
Any tips for a new DM?
How do you let your players know in general that they shouldn't really fight a powerful monster (yet) ?
It's a tricky one. Normally you don't
funnel the PCs towards a fight with a powerful monster, particularly one that good RP dictates that they should fight! That's generally considered pretty bad DM'ing. Specifically it's "Gotcha!"-style DMing, which tends to make newer players think that:
A) The DM is a divot of the worst kind.
and/or
B) The game sucks.*
You'd drop hints about how powerful it was, show what it had done, make it clear that more powerful people had tried and failed to take it on, and make it very hard to get to it - perhaps putting "barely survivable"-type encounters in the way, to indicate that they should think twice.
Finally, if you aren't looking for a "Gotcha!"-style TPK ("Teach you to roleplay your characters correctly and not metagame, SUCKERS!"

- Great lesson there, WotC!

), you'd probably want to open with a very clear description of it's size/power, AND have it start talking before the PCs do.
I mean, Green Dragons love lying, love cross-questioning people, love deceit in general, and manipulating people, and don't really get off on direct fighting. It doesn't even have to make complete sense for them to do it - they enjoy the process of lying and manipulating, even if it doesn't get them anywhere. Hopefully they can lead the PCs down the garden path, then fly off, rather than getting into a fight. If the Fighter who is keen to kill them starts with them, you might have them laugh it off initially (it's not like he's going to seriously injure said dragon), and give his friends a chance to restrain him.
If you have done all that, and make it clear that the Dragon WILL eat them for breakfast, and they still want to fight, well, thems the breaks! If only certain PCs do, though, I'd kill them off and not the rest, and have the dragon be all "Let this be lesson to you and now, for saving you, you must do me this favour...".
* = Yeah, really, not a good lesson for the first adventure - but a fairly common one with WotC-produced first adventures - certainly KotS was enough to make me question whether 4E was any good! I eventually worked out that it was the adventure that blew goats, and that I was going to have to write my own if I wanted this to work, so I did!