You should definatly keep the players out of the line of collatoral damage, but they should definatly have a role in the story. They're players after all, and not just listening to a storyteller.
Maybe in one of their missions near Shadowdale, they run into the gathering of dragons, resting before they attack in the morning.
The players could be hunting for spellcomponents in the woods, maybe spellcomponents attached to an owlbear or the like.
Then suddenly they come upon this large open field in the middle of the forest. It looks like the forest has just been burned away, and in the large field lie a few dozen dragons, some sleeping, some awake, but all of them resting.
Then suddenly a big red stands up, raises his voice and starts a speech "Tomorrow we travel to Shadowdale, my kinsmen, tomorrow we destroy the wizard once and for all."
This should get the players thinking it might be a good idea to get back to town to warn the old mage.
A few encounters should slow thier progress. Maybe some wyrmlings who are wandering around who find that the players make good toys. Or some cult of the dragon followers.
When the players just reach town, the dragons attack. A main tavern catching flame from a breathweapon could send the players on a resque mission while the dragons attack Elminster.
If Elminster decides to planeshift the town because of the damage dealing with the dragons would do to the town, show some of that damage.
Tell of a white that gets hit by a meteor swarm and plummets to earth as a fiery husk, taking down a whole stone tower. Let a dragon snatch up Elminsters iron golem and throw him through a few buildings.
The battle can also be used to slay some of the other adventurers that hang around Shadowdale, so that the players although low-level, will be some of the toughest people around when the shift is over.