Timmys exciting escapades get him in trouble. His parents send the boy to Dr. Trahk, a Tibetan monk, to talk. Before long, Timmy begins to realize that many of his thoughts were colored by his own perspective. His older brother did treat him a bit harshly at times, but Martin is really a good friend. And, almost unbelievably, his teacher is not a witch at all.
As Timmy comes to see the world differently, he begins to have more positive, constructive feelings. With Skorzys help, he becomes extremely popular in school. He even manages to get Martin to stop smoking.
All this time, the relationship between Timmy and his dragon threatens to change. Is Skorzy real? Does Timmy still need him to help fight his battles? What is reality, and how does it depend on his perspective? As Timmy successfully struggles to resolve these questions, the dragon slowly fades awaybut not before Skorzy aids Timmy in a final, daring escapade that involves an alien from outer space.