John Walter has developed the theory that, in the Zemeckis Beowulf, Grendel's Mother is the dragon ... that for some reason, Beowulf doesn't really kill Grendel's Mother, and she comes back nastier. Michael Drout, commenting on that theory, agrees that it would be a reasonable way to tighten up the narrative.
Much of this is speculation gleaned from the bits found in trailers, so let's keep that in mind. That being said, I think Drout has hit upon the most difficult matter for any film adaptation of Beowulf: narrative tightness.
The pacing of the poem isn't like the pacing of a film, or even like the pacing of a novel. Beowulf shows up, stays a few days to kill some monsters, then we jump ahead in time to when he's an old man. This is a problem for a film, because the dragon episode isn't just an extended denouement; it's the climactic ending.
Now, if it were up to me, I'd film it as a trilogy based around each monster, because I think audiences would have a greater tolerance for that leap in time if it were a different trip to the movie theater or a different DVD. That's in the ideal world, though, in which I had both an unlimited amount of money and talent as a film director. In real life, filmmakers have to compromise.
Beowulf: Prince of the Geats tightens things up by presenting the story as told by Unferth years later, after Beowulf's death. Between these two versions, I think we see the two of the three most obvious solutions to the narrative problem of Beowulf: either tighten it by framing the story with an external narrator (probably a scop), or tighten the timeline by having Beowulf fight the dragon while he's still young.
Then, of course, is the third option: leave out the dragon altogether. Some anthologies commonly used in high schools treat Beowulf as a series of excerpts without the dragon episode. I'm not a big fan of this approach, but it's acceptable, I think. Consider, for example, John Gardner's Grendel, which, I think it's safe to say, is probably the only Beowulf adaptation to win nearly universal acceptance among Anglo-Saxon scholars. Gardner's narrative only covers the story through the death of Grendel, with Grendel's Mother and the dragon appearing as secondary characters -- though the dragon does foretell his own death in prophecy.
I think you need to include the dragon just because, darn it, it's a dragon. As far as the spectacle of film goes, which is more visually stunning, a couple of trolls or a dragon?
And, on a side note, have any of the Wordhoarders seen D-War: Dragon Wars? The reviews were bad, but the story is supposed to be based on some Korean legend I've never heard of before.