I think Dragon deserved to win. He's the "most wanted man in the whole world", for crying out loud. Normally, the Pirate King would be the most wanted. Dragon is more wanted than any of the Yonkou. Bounty generally indicates strength, so that would place Dragon at least around Yonkou level, if not above. Who knows where exactly, but he's damn strong for sure.
On a side note, I wonder if Dragon will end up being the final "villain" or something. As in, he wants to take down the World Government, but in a way Luffy doesn't want, and so Luffy ends up fighting him? Just a crazy idea.