As I recall the problem they felt was that go motion as applied in Empire was a half measure in that they blurred the legs but not much else, so it felt "wrong" when you looked at it, especially because there was blur when it was running, but when it stopped and looked around it got that typical staccato stop motion look about it.
... AGREED! Go-Motion was only partially successful. But isn't that so typical of HOLLYWOOD? They come up with this one solution to this one problem and try to use it as a catch-all, instead of trying to solve the entire scope of it.
Once computer graphic imagery hit the scene, instead of cheap-looking men in rubber suits, we got cheap-looking CGI. The point is, whenever one technique is over-used, or used to the exclusion of all other techniques, almost, the shortcomings of that technique tend to get magnified.
But yes, Dragonslayer was just a brilliant movie for its time, in all regards. The dragon itself, was handled absolutely right, with where technology was, at the time. Even so, the dragon didn't really feature much and about a quarter of its time onscreen does reveal the limitations of the time. It's herky-jerky, but you can kind of see, too, ILM trying to compensate for it. The angle would be such, that it would be less noticable, or the camera would move, or shake, to sort of mask the imperfection. I give ILM an "A" for effort ...