I think I've finally found out what that phrase means. Actually it became quite obvious when I stopped treating it in its literal meaning.
What if "literary trend for shit books about talking dragons" refers not to any specific book about dragon with ability to talk, but the fantasy genre in overall?
This way I believe it refers to works of 19th century writer, William Morris, who helped to establish the modern fantasy genre. As we can read at Wikipedia:
As an author, illustrator and medievalist, he helped to establish the modern fantasy genre, and was a direct influence on postwar authors such as J. R. R. Tolkien.
What's supported withHis books, such as "The Wood Beyond the World" or "The Well at the World's End" are credited as important milestones in the following argumentation:history of fantasy fiction because Morris's works were the first to be set in an entirely invented fantasy world.
In the last nine years of his life, Morris wrote a series of imaginative fictions usually referred to as the "prose romances". These novels — including The Wood Beyond the World and The Well at the World's End — have been credited as important milestones in the history of fantasy fiction, because, while other writers wrote of foreign lands, or of dream worlds, or the future (as Morris did in News from Nowhere), Morris's works were the first to be set in an entirely invented fantasy world.
And further:"The Wood Beyond the World" is considered to have heavily influenced C. S. Lewis' Narnia series, also Tolkien considered much of his literary work to have been inspired by an early reading of Morris, even suggesting that he was unable to better Morris's work. Also such names as Gandalf or Shadowfax come from Gandolf and Silverfax which appear in "The Well at the World's End".
Early fantasy writers like Lord Dunsany, E. R. Eddison and James Branch Cabell were familiar with Morris' romances. The Wood Beyond the World is considered to have heavily influenced C. S. Lewis' Narnia series, while J. R. R. Tolkien was inspired by Morris's reconstructions of early Germanic life in The House of the Wolfings and The Roots of the Mountains. The young Tolkien attempted a retelling of the story of Kullervo from the Kalevala in the style of The House of the Wolfings; Tolkien considered much of his literary work to have been inspired by an early reading of Morris, even suggesting that he was unable to better Morris's work; the names of characters such as "Gandolf" and the horse Silverfax appear in The Well at the World's End.