Again, I am aware that they predate the Allagans. I never said that they didn't. The only thing I said was that we don't know that the dragons were actually on the planet before the Allagans developed as a species. There's lots of stars up in that sky. They could have been anywhere. That being said, you indicate in your timeline that Middy arrives with the 7 eggs during the Divine Era. What's your source for this? I don't remember them saying it in the main story quest. Was it mentioned in a Lore panel that I missed or something?
Either way, The point is that Middy explicitly states in the story that when they arrived on the planet Bahamut and his mate left him to go seek out land to settle for their decedents. If Bahamut's search for new land was after the Allagans formed their civilization, than it's easy to see how they took it as a sign of aggression. If he did this before the rise of the Allagans, then it's still easy to see how they took it as a sign of aggression, since their entire species evolution would have been a competition for living space with another species of super powered dragons whom the Allagans eventually find out are not even originally from the same planet.
Honestly, it's harder for me to understand how the dragons couldn't have just avoided the whole thing. Given that they were alive long enough to see the Allagans evolve into full fledged beings and establish the Allagan empire, you'd think they would have had plenty of time to work things out with the Allagans... Chances are they were just fundamentally incompatible (Allagans: Hyper aggressive/progressive/expanding vs. Dragons: Hyper emotional/sentimental/self-righteous. = not a good mix.)
