First of, Fireballs may use AoE grenade rules for how targetting works, but that doesn't mean they use overlapping explosion rules. All the spells use is a threshold test, like grenades, to prevent scatter.
Second, you are mistaken on one bit. The player can command a Spirit to perform battle, yes. The Spirit then uses any powers it desires for performing that task without extra services. However, the player has no say whatsoever in what powers the Spirit uses! If they do command the Spirit to use a specific Power, that is called a Power Service and costs 1 Service. So the player cannot go "use power X on this guy, then Y on that guy, then kill them all" for a single service.
As for the Dragon: It has wards, Spell Defense, Spirits of its own, probably has Detection spells active, and so on. A Dragon should never go down unless the players actually deserved it. They got decent spellcasting, ranged attacks, they got really good senses, Hardened Armor, Hardened Mystic Armor, they're pretty damn smart, it won't be easy taking them down.
Yes, a player that goes unchecked can wreck havoc. But there are plenty of tools for the GM to stop it, so it's not a piss poor job from the writers' side if the GM doesn't do it. Now if the GM doesn't know what tools to use, they can ask for advice, but that doesn't automatically mean the game screwed up.