A 4 PC level 3 party against a young green dragon level 5 solo is an n+3 encounter. This is considered hard. So by definition, a TPK is a likely outcome.
Does your program heal unconscious PCs, have PCs stay out of range of area attacks, have a defender try to hold down the dragon while the other PCs either pot shot it or aid the defender in some way, allow the PCs to use Daily items, etc.?
Healing powers are supported. The cleric can do two healing words in an encounter and will use those to heal unconscious allies. They also know how to use Second Wind (but that's only when they are not unconscious of course).
The program is only an approximation and does not keep track of position. The way it works is that the area attacks pick a random number of opponents in the blast. You shouldn't see those percentages are absolute numbers. I'm making several assumptions in my program. I'm using my program mostly to have a rough idea of the damage throughput of players against an encounter and also to compare various options. For example, I have used this program to see what the effect is on the average number of rounds needed to complete the encounter if you do various tricks like for example: half the HP of monsters but double their damage.
The PCs can use at-will, encounter, and daily powers. They currently don't have any magic items yet but the program supports them.
Edit: forgot to add that Combat Challenge also works (with marking and related).
This is not exact scienceOne has to take such results with a grain of salt unless the program is designed to seriously emulate player equipment, tactics, and racial abilities.

Yes, the program just picks whatever it thinks is the best power for the moment and that's something that's just calculated based on a subjective value that I gave to the powers and the expected average damage.I have noticed that during the beginning of a campaign when the players are not as familiar with their powers and the abilities of their fellow PCs, that they are merely a set of numbers on the character sheets. Everyone more or less does their own thing. As they get experienced with each other, there is a teamwork that is greater than the sum of the parts where PC tactics start getting seriously stronger. I suspect that your program does not take this into account and just compares damage and conditions.
Greetings,