Ndtyhij

Every time after watching Shrek 2, I'm disappointed that we don't get to see Dragon while Donkey is transformed into a steed. Is there any information as to what happens to her or what she looks like during that period?

The film's co-Directors toyed with the idea of making Dragon into a pegasus but ultimately decided against it because it didn't really add anything to the film to see her transform.

Quoting from the Director's Audio Commentary (between co-directors Kelly Asbury and Conrad Vernon):

We worked on that a loooong time. I mean, how do we show that that potion affects Fiona as well as Shrek? I mean yeah, big blue flash, yeah one flash. I think there was one point, because Donkey was, Donkey changes into a "noble steed", everyone asks, yeah but we asked ourselves, everyone asked us afterward, 'Who does Dragon change into?'

Right

And at one point we did have her change into a Pegasus, a biiig pink horsie with wings ... and I still think offscreen, she's a pegasus somewhere right now, wondering what the heck's going on and flying around...and then she changes back into a dragon before the end of the movie.

And from the film's Second Audio Commentary (between Producer Aron Warner and editor Michael Andrews):

Someone asked me "what about the Dragon, how come you don't see her transform" and I said "funnily enough, we did do that at one point...but it was just a bit weird to suddenly jump back to the Dragon".

Well yeah, at one point the Dragon was a unicorn or a pegasus with wings.

Yeah, she was part of the 'Rescue Team' later in the film but she looked too much like a pretty pony which was fine but it ended up just not hitting me...

As to why they didn't include her in the film until the very end, this is discussed in the film's second commentary. In short, it was because having a gigantic fire-breathing dragon as an ally instantly destroys any sense of suspense in the fim

We tried to put her in, several times before but... but you can't have
her around a lot because she, 'cause she gets everything done. She can
get through any obstacle.

Like we couldn't have her to get into the castle or anything
like that, or to get those guys out of prison. It would have just made
it all too easy.

Directly from the Shrek Wiki, it says that she "was supposed to change into a beautiful female Pegasus, the perfect match to Donkey's transformation into a handsome stallion" it makes me rather sad that was cut :p

There is nothing canon however it would stand to reason that she transforms into a horse like donkey

It does say that she was supposed to turn into a beautiful female pegasus while Donkey turned into a handsome stallion but they cut the part of when Dragon turns into a pegasus. I don't actually know why they cut the part of Dragon turning into a pegasus.

Okay, so Dragon becomes a Pegasus, but has anyone thought about what happens to the children? Assuming she had already birthed their mutant babies, the spell only specifies your true love being included, would they just end up raising those donkey/dragon babies as a stallion and Pegasus? I would assume they’d have to.. because otherwise how far down would that work? If a really old couple took the potion I wouldn’t really expect all of their lineage to change suddenly as well.

But then again, if she is preganent with said babies, pre birth, would the spell really change the babies inside of her? Obviously they’re developed enough to be birthed and fly far far away, so they’re clearly their own being, if not yet seperated from the womb, so I would assume not. Then the question becomes, is she a horse sized Pegasus or is she a dragon sized Pegasus? Because those donkey/dragon babies are pretty big... was the birth of their children premature due to the change in her size?