Here's a different question. Why has the game reached a point the PCs are negotiating with an ancient wyrm far above their power level to avoid incineration? Can't the same effect come from a dragon closer to the PC's relative power? Perhaps maybe a few levels higher, rather than multiple? Is it a requirement the encounter be a TPK on legs?
The PC's are negotiating with a dragon because they
cannot just kill it, take its stuff, and move on. Once players sense that a situation is winnable in combat there is little to motivate them to act otherwise unless the rewards for doing so are immediate and obvious.
Part of the balance for the game comes from being able to make decisions that pay off in a huge way and sometimes having the chance to step in a big enough mess to bring about total ruin.
If everything is kept on an even keel and within the "beatable" range then the game can become less exciting.
In the last session of my 4E campaign, the PC's discovered evidence of an underground tunneling creature in the area. On thier next foray out, they decided to bring along a goat as an early warning system and sacrificial bait for the beastie if it came to that.
A little while later, the party (mostly 2nd level), was attacked by a hungry bulette (a level 9 monster). The PC's got into defensive positions and tried to engage the monster. Thier attacks prove ineffectual, so they left the goat and fled across the river while the monster munched on the goat.
The "challenge" of the encounter was for the
players and was not one of comparative combat statistics. The players recognized the danger and took appropriate action. They did not plan thier expedition to fight a rampaging underground monster. Now that they have knowledge of the threat, they can choose to make plans for removing it. Depending on the plan and the skill of implementation, they might overcome the beast through methods outside of standard combat.
These types of situations help keep the game interesting IMHO, no matter what edition/system you use. It was these types of challenges that 1E was designed and balanced for. Try and think of it as being balanced for the people at the table rather than thier characters. The game rewarded clever play more than it did having the optimal arrangement of numbers on a character sheet.