The dragon TPK'ed the level 2 party also, though this time he was down to 20 HP's when he took down the last character. Some interesting points, the warlock killed the Fighter and the Bard by hitting the dragon while it was bloodied. The dragon's shroud recharged like twice. That was bad. Druid's Summoned Pack Wolf killed itself by taking damage from the tail on a miss on its first attack, and hitting the bloodied dragon while shrouded on its second attack.
I've thrown level 4 challenges at level 2 parties, and they usually do just fine, not even a single death, let alone TPK. This is a little too powerful.
After these tests, I'll have to concede Acidic Blood is too potent as written. Maybe it could be more appropriate at a higher level.
Shroud of Gloom should probably be an encounter power, and not on a recharge. I realized I completely forgot to take into account the -2 penalty from the shroud, and was just using the vulnerability. Failing those DC 10 heal checks is the biggest waste of action, perhaps there should not be a DC. recharge and DC 10 heal check is killer on action economy.
One other thing that doesn't sit too well with me is that without a leader, it's near impossible to recover from the initial damage the dragon does with the breath and ongoing damage. But I guess that goes in the territory of DM adjusting encounters based on party composition.