I'm looking for a book that was written by two authors about two warring nations of elves and hobbit-like people. The book cover has a small hobbit-like person in a shallow cave with a dragon looming over him. The title escapes me but I think the word dragon is in it. The conflict is based around a dragon destroying an air ship and both nations pointing the blame at each other. I know it's a vague description but would love if someone could help me out.
It's called Dragonworld, by Byron Preiss, Michael Reaves, and Joseph Zucker (Illustrator); and the Illustrations were amazing in that book.
Is it possibly a Dragonlance novel set in the continent of Taladas? They had gnomes that rode in airships and elves, along with nasty dragons.