If we're going to be totally ignoring the game mechanics, then I'm afraid I am going to have to discontinue my discussion on this point.
What have the dragons retaken that was lost? They have not retaken Draak, they have not fixed time for themselves, they have not returned themselves to their previous place of near-gods above the bipeds...
Yes, great perks like everyone not being dead. x3 I think you might be downplaying the importance of the Gift here. Again, the Gift is the only reason anything on Istaria still lives. Dragons along with every other creature on the planet would have been wiped out otherwise.
It is possible for a dog to walk on two legs. Is it practical? No. Dogs are physically not built to walk on two legs. I do not think that Istarian dragons are built to walk on two legs either.
What I am arguing is that walking on two legs would be awkward and unsustainabble for a dragon without making alterations (and I don't mean stance changes; I mean khutit-transformation-level stuff) to its physical body that allow it to do so.