I really like the multiple attack penalty mechanic. I have a dumb question to ask. The draconic frenzy ability that dragons have access to, lets them make 3 attacks for only 2 actions. Do the multiple attack penalties apply to these attacks as well? I am inclined to say that they do apply.
Also since draconic frenzy only uses two actions, can a dragon use his third action for a fourth attack?
Yes the attack penalty is normal with Draconic Frenzy and you can indeed make a fourth attack using your 3rd action.
But to be honest do something else with that 3rd action, like flying away to mess up with the close range player characters.
What Kyrone said.
Dragon's are built to fly. Flight, often with reach, is a major advantage, and one reason hitting them w/ Slow or Stun gives a significant debuff: They can't maintain flight and do one of their 2-action routines.
Of course, skill unlocks let many PCs leap like frogs so some of the difficulty can be alleviated, but if the dragon has spells or a long enough breath weapon, they can remain above most leaps until Legendary kicks in.
But yes, if they have the warrior prone in front of them, a good agile claw, safety from getting swarmed, and perhaps a Reaction that disrupts the warrior if they try stand, then the dragon can use its 3rd action to Strike. Imagine you try to stand, the dragon hits you and interrupts that, so you stand in action 2. You still might need to Step to the dragon, though at this point I hope you have a sturdy shield or helpful friends.
Heck, many PCs can get 4 attacks/round too w/o Quickened.