I never liked the word magic since it's more a word used for a lack of explanation than an attempt to explain a phenomenon.
But the real concept here isn't about if hydrogen, methane or helium is lighter than air but about the actual density of the gas itself (the Ideal gas law).
<tt>The "Ideal Gas Law" says that m = PVM / RT where:
m = mass of the gas in grams
P = pressure inside the container (in atmospheres)
V = volume in liters
M = Molecular weight of the gas
R = 0.082
T = Absolute temperature (in Kelvin)</tt>
For example, let say you have a balloon that is fully inflated with helium and someone wonder if adding more helium would increase the lift. Well, if the balloon doesn't get any bigger at all, the answer is no. If the balloon stretches a tiny bit bigger, then you would have to know if the tiny increase in size add enough lift to offset the extra weight of helium added.
So a dragon has no advantage to hold the gas in a compressed state (since in this state it would become heavier than air) and if uncompressed, then the dragon would have to look like the Goodyear blimp to feel any real difference. It's about the same thing in various events where you have someone holding a large grape of balloons filled with helium, while I will admit that the balloons are not filled entirely with helium, I don't think the person holding them feels any lighter.
I'm not sure if you have heard of Larry Walters who managed in being carried into the sky by a giant bouquet of colorful toy balloons in 1982, but I have
an image here to show the size and the amount of balloons needed to lift a single man.
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Also, hydrogen possesses several unique properties that render it more hazardous than most other flammable gases. It burns with an extremely hot, but non-luminous flame. Hydrogen has an unusually large flammability range and it can form ignitable mixtures between 4 and 75 percent by volume in air but what make it more dangerous is that the range for explosive mixtures is also very broad. Given confinement and good mixing, hydrogen can be detonated over the range of 18 to 59 percent by volume in air.
So I do not really like the concept of using hydrogen as a flames thrower. If you have done the experiment of putting a flame in a test tube containing hydrogen gas, it makes a loud pop sound (small explosion). Truly, if I had to work with a gas to create a flame, I would use methane over hydrogen since explosive mixtures are too easily formed with the later.