A green dragon doesn't exist in nature on a lava base – I just slapped on a new texture, and the glow effect was also removed. That is, only the recolored texture exists, and such a dragon itself doesn't appear anywhere.
To change the city's development tree, for example, in \GameMechanics\TownBuildingSharedStats\Dungeon\Dwelling_5\ChaosCavern.xdb, to make hydras a level 6 creature when purchased, you need to:
?xml version="1.0" encoding="UTF-8"?>
TownBuildingSharedStats ObjectRecordID="1000097">
NameFileRef href="/Text/Game/TownBuildings/Dungeon/Dwelling_5/Upgraded_Name.txt"/>
DescriptionFileRef href="/Text/Game/TownBuildings/Dungeon/Dwelling_5/Upgraded_Description.txt"/>
Type>TB_DWELLING_6/Type
Upgrade>BLD_UPG_2/Upgrade
Cost>
Wood>5/Wood
Ore>5/Ore
Mercury>5/Mercury
Crystal>0/Crystal
Sulfur>5/Sulfur
Gem>5/Gem
Gold>6000/Gold
/Cost
ModObjectName>chaos_cavern/ModObjectName>
dependencies
Item href="DampCavern.xdb#xpointer(/TownBuildingSharedStats)"/>
/dependencies
Creature>CREATURE_CHAOS_HYDRA/Creature
Creature2>CREATURE_ACIDIC_HYDRA/Creature2
DevLevelNeeded>12/DevLevelNeeded
UIObjectName>Dwelling_6/UIObjectName
UIStackPosition>1/UIStackPosition
Icon href="/UI/TownHall/dungeon/128/d6u.xdb#xpointer(/Texture)"/>
/TownBuildingSharedStats
Only what is in red changes, and nothing else?