Yes, the proposal to incorporate a Welsh dragon into the Union Flag is silly. Not least, what will become of the flags of those other sovereign states, and of one of the United States of America, which themselves incorporate the Union Flag?
Instead, versions of the Union Flag might be shown in which, in a circle in the centre, only that of Saint George, Saint Andrew or Saint Patrick remains, or a Welsh dragon is indeed superimposed, in place of the current flags of the parts of the United Kingdom.
Better still, the Union Flag should be recognised as the only official flag of each of the four parts, and God Save The Queen as the only official anthem, whatever folkloric attachment there might be to others in practice, as is already the case with, in particular, the Royal Flag of Scotland, and Flower of Scotland or Land Of My Fathers. Thus, for example, when two parts of the United Kingdom played each other at sport, only the Union Flag would be flown, and only God Save The Queen would be sung.