Yea it looks like that dragon design will get distorted once you extend the glutes.
I may be wrong, but I think the only way to make a continuous clean joint-set design is to pay respect to how the Tori moves. For instance, you can move along the sides of the arm and up and down the front/back of the legs somewhat freely. But you need to pay attention to things like the pec/shoulder line because you can have heavy distortion there once you extend/contract the shoulders.
Of course, you don't need to have a clean joint set design. If you go for a messy set design you have much more freedom. Take nuthug's set for instance, none of the lines meet up so the design is messy (IE: not clean). But, the set is still continuous conceptually over the joints so it looks good. I think you need to decide beforehand (if you haven't already) whether or not you want this set to have a clean look, messy look, or a hybrid of both. Personally, I think this set would look best if you did a hybrid of both. That is, have some elements that are continuous over the joints visually, and have some elements that are continuous over the joints conceptually, but not visually.