Yes, OP is wrong. Dragon type existed in Gen 1 and was wildly overpowered.

Yeah and the Dratini line was the only dragon type in gen 1 and was supposed to be very powerful and psudo-legendary.

I wouldn't be surprised if they decided against giving Gyarados the dragon type because of that specific lore reason as it's never made a whole lot of sense to me that it had the flying type either. I think Gyarados would be too strong both offensively and defensively if it didn't have the quad elec weakness which is probably why it's the way it is. (Disclaimer: I know nothing of Pokemon beyond gen4 and feel free to disregard my opinions)