Having never read Iron Fist, I'm finding this whole series a bit mystifying. Was that dragon meant to be a manifestation of Iron Fist's mystical power? If so, has Tony really been stumped ALL THIS TIME in realizing that combining Wanda's and IF's powers (both of which are proven effective against the Phoenix) might be doubly effective against the Phoenix? That sounds as simple as one plus one equals two.
No, it's not a manifestation of his power. K'un L'un has at least one dragon living in it.