Refrain from Crutches
Hey Yex. I know my advice is going to be different than everyone else's, as always seems to be the case, but I don't think you need to "do" anything about it. In fact, I think doing nothing may be the best thing you could do.
Personally, I wouldn't cloud her 3-year-old mind with these pieces of literature, with draconic magic, and any such stuff just yet. The reason is, she's already "there," so to speak. No one has to make her be there. At her age her mind is already occupying a magical place. It doesn't need assistive crutches (occult literature, magical paths, altars, rituals, etc.), like adult minds seem to need because we have lost our magical consciousness and have to frequently revive our connection to it via these many paraphernalia. Let her natural thoughts have court. Let them air out, be expressed untainted. If you proselytize/evangelize "magic" and "paganism" to her, she will naturally graft those ideas onto her pristine, soul-expression energy, if for no other reason than she thinks that's what you want to hear her say.
In my opinion you should help her keep her thoughts as clear as possible, and in fact, preserve them for her. I say preserve because When she hits her teen years, some or all the doorways to these memories and magical thinking will have closed (perhaps, to be re-opened in adulthood sometime, perhaps not). It's just the way it works for most of us. We have to go through the Dark Night of the Soul of our teenage years, "individuation" some call it. The energetic break from the parental umbilical cord can be kind of traumatic, as most of us must rebel to make the cut happen. Sometimes this means cutting off parts of ourselves, only to find them again years later. This process is more or less severe, depending on the individual.
To help her reconnect with that part of herself when the time comes, have solid documentation preserved. It's like trying to remember a dream. Dreams start to disappear with time. They have a shelf life. Past life memories are the same way. By the time she's six she might remember some of what she's said to you at three, but not all. By the time she's nine she might not remember the content, but she might remember the feeling of telling you these things. And by the time she's twelve, well, for one, she's going to think you are weird just bringing these things up, two, she is going to be more interested in giggling with her girlfriends about cute singers and actors than she will be in talking to you, and three, getting used to menstruation can be quite...challenging...for everyone involved, to say the least. Past life, what past life? For many reasons, she might be very disconnected to what she's connected to right now. Help her return to herself when she's older by documenting everything now.
Preserve the Memories
So, preserve the memories now while you can. Just focus on that. Every instance you chat with her about these things WILL be an actual past life regression session. As I said, remember, it's adults that need assistive spiritual crutches/technologies like "hypnosis" in order to disconnect from the superficial thoughts of our mundane minds, and re-connect to our alternate selves. Kids, on the other hand, especially toddlers like your daughter, literally stay in a perpetual light trance state (seriously, this was actually taught in some child/human development courses I took in college; that's why I tend to believe kids when they say things like what your daughter says).
You could make preserving the memories really fun:
Have her draw her memories. Have her sketch and paint the beings she talks about. Have her illustrate the dragon she knew, for instance, and talk about where he is today, what he's doing. Where does he live? Why are the two of them friends? Was she a dragon before? What was the nature of their relationship then, what is it now?
Have her paint pictures of her grandson, give him a name (which is probably really going to be the name of her actual grandson in the past life). Take her to the toy store and let her pick out a doll that resembles him. Let her narrate his story to you, as you video record it. How did her grandson die? What did she do with him as his grandma? What happened to his mother and father? Ask things like that.
"Storybook" Documentation/Photo Album
Take photos of all this, and don't leave them on discs, but print them out and put them in a photo album she could hold in her hands. This way, she could review them with you, keep the memories alive. The two of you could read the album like a story book. Let her narrate the story.
Make video recordings as she's painting/drawing/talking. Ask her questions, like it is an interview that would be posted on YouTube, etc.
Do some role-playing. Make costumes or sock puppets. Pretend to be one of these characters, and have her tell you what to say, let her dictate the "script" (which might be actual recall of past life events).
You get my drift. Hope something of this you find helpful.