Boy there must be a demand for sickening monsters out lately. I would suggest having no advancement capability due to the stagnating effects of the undeath and the sole motivation of being destroyed have on the minds and bodies of the morpheums. Great template.
I feel monsters ought to be scary and/or stomach churning. Orcs are just blokes in green suits for all the fear theey instill in PC's. Dragons are scary but only in terms of stats - there is no visceral fear involved. I want monsters that give the Players (or at least the PC's) nightmares
If dragons don't give your players (and their PC's) nightmares, you're not playing them right. There are few things that drop pc/player morale as fast as returning to your home village and just as you round the hill see the entire village/town in flames and a red dragon flying over head
Like the shadow dragon, a properly roleplayed shadow dragon will scare the crap out of your players as they will not know what they are facing other than it's big, it's shadowy, and it drains levels fast!