I was working on an extensive edit for you when I realized, hey, most of my college applications are due in a week and this is not one of the required essays I still need to write.
So.... only a partial edit:

Besides the color edit, I tried to demonstrate proper dithering, or at least my understanding of it. Hope this helps some. 
Nice edit!
Helm: Also a nice edit, I see what your getting at.
What I'm trying to accomplish is to give the dragon that kind of cute/toylike look, while also making him look organic and alive, like a dragon you could put in your shirt pocket. I thought the purple helped give him a sort of sheen that would have come from an ambient lightsource and give him that almost realistic look but I agree it makes him too shiny.
While I like the clarity and polish of tehwexxl0rz edit, I'm trying to accomplish something in between his and helms edit.
What I'd really like to know is if I have properly addressed some of the banding issues I was having before.
More edits to come!
Edit: I also wanted to say that I think my palette needs a change, something is off in it, and I like where tehwexxl0rz was going with his, but I don't think I want it to be as dark in some areas. If anyone has any suggestions, maybe we can pull apart my ramps and talk about the theory behind the colors and where to go from then.
When I really think about it I think I stole some colors for this dragon from Larwicks snakebomb, its his current avatar. Thanks Lar!
At this point though, I think the palette needs to be adjusted to finalize this dragon, any ideas?
Edits won't be so often this week, I'm getting married on saturday and thanksgiving on thurs. We'll see though.