You're not going crazy: When Excalibur debuted on June 19, 1990, what was at the time the world's largest resort-hotel took its Camelot theme, and the trend for free entertainment begun the previous year by the Mirage, very seriously. What today is a dry moat was filled with water, and each evening from 6 p.m. to midnight, visitors could watch an hourly battle down below, from the vantage point of the drawbridge, as a 51-foot animatronic fire-breathing dragon waged battle against Merlin, who defended the castle by shooting a series of fire balls at the scaly beast, which eventually slunk off back to its lair.
Apparently, it took the designers nine months, and multiple prototypes constructed of clay and foam, to create a suitably lifelike and fearsome foe for the wily wizard and, to this end, it was endowed with "glowing yellow eyeballs, hand-painted scales, and a bloody red grimace". Having found a YouTube video of this spectacle, however, we have to say the dastardly dragon looks more like an ailing giraffe, while as for Merlin, we've seen more intimidating cuckoo clocks. On a technical front, the dragon was also built for ease-of-maneuverability and even featured an easily detachable rubber neck, in case it should accidentally "swallow" something, like a dropped camera, for instance.
We understand that the show operated until 2004, we understand, having been awarded the dubious accolade of "Worst Attraction" in the R-J's annual "Best of Las Vegas" awards in 2002 and 2003. (Officially, its retirement was attributed to high maintenance costs, but the family-friendly experiment was already running its course by this point.)
This isn't the only attraction that debuted with the castle. Guests who entered via the people mover were greeted in the atrium by a fountain/waterfall attraction that rose more than 30 feet above the Fantasy Faire below and featured puffs of colored smoke and water-spewing dolphins and frogs, and a half-dozen lion heads atop, which disappeared in the clouds of colored mist.
The parking lot was patrolled by security on horseback, garbed as Medieval knights, while other free attractions inside included an (anachronistic) Medieval Village, where guests were entertained by wandering minstrels, jugglers, and magicians, and free ten-minute shows on the Court Jester's Stage daily every half hour, from 10 a.m. to 10 p.m.
The Fantasy Faire level was home two 48-seat motion simulators, dubbed Merlin's Magic Motion Machines, which featured "hydraulically actuated seats synchronized to the on-screen action," with a Dolby Five-Channel SR Sound System and 70 mm film photographed and projected at 60 frames per second (similar to IMAX). Bob Sehlinger's Unofficial Guide to Las Vegas described it as the "worst virtual ride" in town.
Commencing in 2004, however, a "de-theming" was commenced, similar to that undertaken at neighboring sister property the Luxor (to the extent that anyone can de-theme a giant castle or pyramid, that is). The dragon vs Merlin show was one of the first casualties and there followed a wholesale removal of the faux Knights of the Round Table artifacts and wandering entertainers. A modern-look upgrade of the hotel rooms followed, plus a takeover of Merlin's Theater by the male Thunder from Down Under revue and the replacement of the dreaded original motion-simulator rides by the SpongeBob SquarePants 4-D ride. Even the Merlin statue that once looked out from a parapet balcony was eventually removed and replaced by an ad banner for Dick's Last Resort restaurant.
So, there's the answer to the first part of your question. To complete a round-up of all the similar opening attractions around town, and their fate, would lead to an answer too epic for one QoD, so tune in tomorrow for Part II (and possibly a subsequent Part III!)
You can see the little "house," from which the wizard would emerge nightly for The Dragon vs. Merlin show, and which is one last remaining vestige to this day, in the bottom right-hand area of the image below, which shows the de-theming in progress. Also note the replacement of the upper Merlin figure by that ad that we reference above.