This is a book that I read in the mid-to-late 90s. It was from a bin of books that the library was throwing out, so it is probably from the 80s or early 90s.
There are halfling or hobbit type characters who live in relative peace, one of them being an inventor who is working on building a flying machine. Dragons are supposedly extinct, but drakes still exist. The difference being that dragons grow larger and can exhale fire, drakes cannot and are generally dumber.
A drake that can breath fire, maybe it was a half-drake?, is going around killing people, including a young halfling at some point.
There is a seed that either the humans or the halflings find that when crushed, makes a citrus scent that helps repel the dragon/drake.
I vaguely recall something occurring and the humans and halflings traveling to the far north to find/hatch a true dragon egg to take control of all of the drakes and the half-drake/dragon was trying to stop them.
At the end, the dragon/drake gathers all of the drakes together and is forced to show that it can use its breath weapon, which causes the drakes to go crazy and destroy it.
The dragon/drake had was a POV in the book as well, not just a silent antagonist.