I bought the collectors edition, and indeed, it is a house pet.
You login, type /claim and get your dragon key item. The dragon item you examine and it gives you about 8 different color combos you can pick as your 'quest reward'. Sadly, it doesnt show you what the dragon will look like until AFTER you make your choice.
After you pick your colors and hit okay, you get your dragon to 'place' in your home.
The dragon itself is funny. You can punish it, taunt it, put it to sleep, make it spit fire, and a few other things. It's funny because it runs around your house, all over your furniture and shoots flames out of its mouth.
I tried setting my table on fire to no avil, still cute to play with.
You can always remove it from your house should you decide you dont wanna pay upkeep costs and re-place it once you get a nice income.