Here's a nice history of the Red Dragon of Wales:

http://www.data-wales.co.uk/flag.htm

http://www.bbc.co.uk/wales/history/sites/flag/

The first web site does mention the old legend of the red dragon of Wales and the white dragon of the Saxons:

The ancient poets Aneirin and Taliesin use the Welsh word for dragon "draig" in the sense of "warrior" or "leader" and this usage remained to the Middle Ages. In the Historia Brittonum (ascribed to Nennius) of around 800 A.D. the dragon is seen as a symbol of national independence in the story of the red dragon battling with the white dragon of the Saxon enemy.
Cheers,

Todd