I'd personally not call it "Wyrmscale", but it's reasonable to let the players do this, if you are ok with setting a precedent of hacking up the monsters they kill for parts to make stuff. That's up to you and your players to decide.
However, if you are going to allow this, I suggest this:
1) Basically treat the materials they get from the remains of the dragon as Alchemical Reagents for Rituals of the value of the armor that you want to allow them to make from the items.
3) Since players cannot craft magical items until level 4, they will either have to wait until then or find someone to craft the items (such as the dwarf blacksmith mentioned in the DMG adventure that you are following). The NPC might charge 10% of the value to make the item.
4) Make sure that you count the end items that are created as treasure parcels.
However, if you are going to allow this, I suggest this:
1) Basically treat the materials they get from the remains of the dragon as Alchemical Reagents for Rituals of the value of the armor that you want to allow them to make from the items.
3) Since players cannot craft magical items until level 4, they will either have to wait until then or find someone to craft the items (such as the dwarf blacksmith mentioned in the DMG adventure that you are following). The NPC might charge 10% of the value to make the item.
4) Make sure that you count the end items that are created as treasure parcels.