While the speculation about fire breathing is fun, the truth is dragons were never described as breathing fire. They spat a different fire, not a conventional flame. This survives often in fantasy fiction, where 'dragonfire' is special in some kind of magical way. The witnesses and dragon slayers tell of a mist, vapour or smoke bellowing forth from their mouth. Given the properties it supposedly had, it sounds like a high pressure jet of vapourised venom or maybe acid. Of course, the only way to explain the effect for people who didn't know better was to say it was some sort of magic fire, when the person hit in the face by this attack starts clawing at their eyes screaming about how it burns. Spitting cobra venom is said to hurt like a burning, stabbing sensation, so imagine that only much worse.
You're correct about the ancestors driving them back as well. In prehistory, dragon cults/clans/priests would offer humans as sacrifice to their dragon 'god' for protection. Eventually, men got fed up of that and decided they wouldn't send pretty young girls to die anymore. They killed the dragons and became the storm gods, slayers of the chaos serpents. Acolytes of the dragons were also put to the sword and fled. Over centuries, the pterosaurs learned like any other species does to either avoid us or become domesticated. Later accounts of encounters often end with the dragon simply flying away to terrain we had trouble following them through, rather than fighting against people. We never did finish the job though, they're not extinct yet. You still have a chance to be a dragon slayer.