AC 25 for Grazzt seems way too high to me. The Tarrasque is the only thing near that kind of AC in the Monster Manual and its a unique one of a kind monster that's probably tougher than any demon lord in a physical fight, IMO. Ancient Dragons only have a 21 or 22. I would maybe give Grazzt a 20-22 at the most.
AC's don't scale out of control in 5e like they did in other editions.
I think you make some solid and valid counterpoints. I do disagree, however, with the implication that it's useless to have several powers/spells unless you use them, which is how I interpreted that part. They are a pool of resources he can draw from depending on the situation as it is warranted, not that he has to use every one to be worth it.
You may be better of using the Dragon spell-casting rules, which rather than having a specific list basically boil down to Dragons can cast X 'spells' per day... where 'spells' is any spell they want under a certain level.