Pretty much any scene involving Vermithrax Pejorative. 30 years on, still the nastiest most badass dragon to appear in a Hollywood film.
The sequence at the burning lake, as Galen has his back turned while Vermithrax rises up from the water, the full reveal of what the dragon looks like up close and personal. Horrifying.
This editor loves CG art. Somewhere around the internet is a CG model of Vermithrax lovingly crafted by a fan. Its nice, but no where NEAR as awesome as the original puppet used in the film! I still get chills at the scene when Vermithrax lifts her head into the camera frame after seeing her little-ones were slaughtered. You can actually see the murder in the eyes!
Ulric: That's no claw, by the gods! Its a tooth! You want me to do battle with that?
The very model itself was landmark in that it was the first 'go-motion' model. Unlike traditional stopmotion techniques, the dragon model was designed to move slightly when the image was taken in order to add a slight blur, smoothing out the characteristic jerky motion of its predecessors.
Ulric's battle royale against Vermithrax. Wizard against Dragon. Thunderstorms versus Fire. All leading up to Ulric's Heroic Sacrifice.