The term is now generally used as a descriptive in a negative context, often to describe a non-Asian's misconception of Asian women. It is also used to describe a manipulative Asian woman, though this is less common.
"I went to an opium den when I was on shore leave back during the war, and this dragon lady got me smoked up, fucked the hell out of me... and then I woke up with my wallet and clothes gone."
"I may be an Asian woman, but I'm not a dragon lady. I have a job and support myself."
"Tom is just an idiot who thinks if he dates an Asian, she'll be some sort of tantric dragon lady who'll have all sorts of spooky Eastern sex secrets."
I have to do a carry out for Dragon Lady. Here's my will.