I cannot imaginae any movie dragon as scary as the Glaurung that walks my imagination. Anything CGI is so deeply unfrightening to me - how much more effective is the horror of films such as
The Others or the
Blair Witch Project where you see just about nothing....
Whiole I share a lot of Squatter's fears, I can imagine a few "art house" directors who might do a very good job but the chances of them getting the chance int he face of Studios wanting to cash in on the lucrative action film market...
Of course it would make a wonderful Opera ... a genre which would be unlikely to baulk at incest or nudity.