I'd say you should be somewhere in project discussion, or near the concept thread.
Anyway... I've never played Bahamut Lagoon, but dragon breeding sounds awesome! I think whether you use scripts or eventing or a mixture of both is totally up to your knowledge of XP. If you've had some heavy eventing experience, then you'd probably be alright using them for the dragon breeding, depending on how in-depth you wanted to go. If you wanted to be able to make over 30 different combinations, you'd be best to check out some scripts. As for the battle system, what kind are you looking for? Obviously you want dragons incorporated into it, unless they're used primarily for travel in your game, but you'll probably want to avoid an ABS, unless you plan on using really large maps. I'd say it would be tough to battle with a dragon in an ABS though due to the lack of next-gen gameplay XP provides.
So turnbased is the way I'd go. That way you could use different actors for your dragon, you, and you ON your dragon, switching between them, or using a summon system (script or event-based) to call your dragon. It seems that if you use a turn-based system, you can work a lot harder on your storyline and maps without worrying so much about the ABS. (A problem I'm beginning to have in my project.)
Either way, keep this updated because I'd love to see what kind of ideas you've got going for the game. And when the basics are down and you've got a few maps, open a project thread on it.