The issue is that it's "Dragons automatically qualify" not "the Dragon type also counts as dragonblooded for purposes of qualifying for" as it should read. Yes, it's very likely that's what they intended (hence changing the common sense reading).
With that said, it makes sense that Dragons might be able to take Improved Dragon Wings without the prerequisite feat, so maybe this is what they meant. There's no other abuse for the auto qualification thing except the substitution levels.
They're class levels, not PrCs. But "Dragons automatically qualify for any classes" is right there in the rule, hence the issue.It also still doesn't address the fact that substitution levels are not a PrC. You don't just "pick up" substitution levels. They replace the listed level in a core class. Its right there in the name. Substitution.
You seem to think that HD means racial hit dice (which is what it should have meant there). But it applies to class hit dice too, which is the problem. Hence, the advanced dragon rules should refer to racial hit dice, not hit dice.I feel like you totally missed my point on HD as well, but, since I really don't have anything more I can add to that, I'll just let it stand.
JaronK