You know, there are some people do see the actual dragon flying in the sky and river. Maybe it is related with UFO. They are not only legends. There is also a game called dragon dance, you may see them here:
http://www.cuch.org/html/Chinese-lion-dance-costume-and-China-dragon-dance-costumes.htm
http://www.cuch.org/html/Chinese-lion-dance-costume-and-China-dragon-dance-costumes.htm