@Chris G,
I tried this on 2 machines and had some problems.
I get an "Untitled.rtf" file, along with the desired TestDragon-selected-format file, no matter which format I select.
There's a lot of stuff running on my machines and I wondered if something other than TextDragon was causing this. Now I think that is probably not the case as, after removing TextDragon, the drag ability is gone.
I'm a bit pressed for time at the moment but I'll dig around some more as soon as possible. Just wondered if the "Untitled.rtf" item meant anything to you.