Well, I (briefly) studied a kung-fu style called Black Dragon, and man, was it hard to get that black dragon to sit still for 3 hours during our class!
OK, the last part isn't true, but I can definitely see someone developing a style based on dragons. My instructor actually developed techniques from watching wolves fight, and that was his contribution to kung-fu. It's very plausible. Now whether there would be a high student casualty rate if the dragons weren't so sociable is another matter....
Oh, and another thing. I'm studying European martial arts now and let me assure you that they are in no way inferior to Asian unarmed techniques. The principles and even many of the moves are identical. Unfortunately (or perhaps fortunately) most of those skills and techniques were lost during the Industrial Revolution, while China remained a peasant society and thus preserved its techniques well into the 20th century.
Hence, 'fighting monks' were as skilled and probably more common in Europe during the Middle Ages as in China. The difference being that they were not monks per se, but rather gentry and freemen, wandering mercenaries from free companies and the like. The difference between monk and warrior was much smaller in Europe. As someone said, weapons were much more restricted in China than in most of Europe, and so there were very few people who only studied unarmed techniques in Europe, thus blurring the line. Those Swiss Guards the Pope has were not for parades, they were superb fighters, including hand-to-hand. It's just that given a choice between unarmed and weapon combat, smart bet is to pick the weapon.