Cleon, the spells you suggested are 2nd-level, so beyond its ability.
Oh sorry, I misread the "second" with a level behind it for some reason.
Obscuring mist is OK, but it can just phase out if it wants to avoid a fight. I think
grease has more versatility and repeat value, There's always
true strike, which would allow it to pop out of the ether with a +20 bonus on bite attack, or
burning hands if we feel it needs some Area-of-Effect punch.
As for feats, I'd go for Flyby Attack for the first one. Not so sure about t'other. How about Spell Penetration, since I'm guessing it will often have to deal with other Tiny magic-resistant dragons?
I'd was thinking of Diplomacy instead of Appraise, since pseudodragons have that skill, but it does say they covet treasure. Diplomacy is probably a bit more useful, though.
So, if we give it Knowledge (arcana) which of its other skills shall we take points from? Hide seems the obvious one, since (a) it can use ethereal jaunt to avoid attention and (b) it not having good conventional stealth will help differentiate it from a pseudodragon.