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So, what's the point of capturing it? It's not a condition for victory, and if it were, I would attack and maybe lose, but I would replay until I could eliminate as many enemy stacks as possible, because blinding with mind control works wonders. First, I would blind the priests, then mind control the thanes and beat them with a chain attack, eliminating several enemy units. Of course, there are few chances against magma dragons without mind control, but if they weren't there, I think it might be possible to capture it.
Added 20 minutes later
As for templates, I don't mind playing with a proper build, but after completing the original campaigns on Hero, I don't really feel like playing it anymore, because the enemies in Hero almost always behaved passively, and therefore fighting them was boring and uninteresting.