I don't understand. Are you saying that the red-eyed cyclops is stronger than the dragon Arcat (or the lava dragon)? Maybe only if it goes into a rage – then yes. But the rage effect of the Orcs still pales in comparison to the effect of rune magic in the Dwarves. A Dwarf will cast an invulnerability rune on the dragon, or even better, a double attack rune – then no rage will save it!

Well, the cyclops also has a -2 luck debuff in addition to rage. It's not that uncommon for the opponent to then suffer from bad luck.
The Berserker rune (double attack) only works when taking damage. The invulnerability rune is a good thing, but it might not work.

By the way, here's a question for everyone: if you attack with the Battle Frenzy rune (or something like that – it allows you to attack everyone around without retaliation) on a single stack (i.e., there are no other enemies nearby), will there still be no retaliation, or will there be?