I don't know why the KJV translated [this] as dragon, but this tradition is noted in HALOT (Hebrew and Aramaic Lexicon of the Old Testament], with reference to passages such as Psalm 74:13 and Psalm 148:7 or Job 7:12, where the context suggests water/sea, and therefore some kind of sea monster.
Clearly, the context in Isaiah 35 is that of land and wilderness, where hyenas and jackals live, as also Isaiah 13:22, 34:13, and 34:20.
The word in these cases is tannim, the plural of tan. In Psalm 74 and other places where "sea monster" seems to be in view, the word is tannin, which is either an Aramaic plural of the same word, or quite possibly a different root, which is the singular tannin, with a plural tanninim (cf. Genesis 1:21). Others suggest that they are the same root, with different meanings in different contexts, but it seems to me that there are two different roots, but obviously easily confused.
Again, I do not know what was in the mind of the KJV translators, e.g. whether they tried to deal with the same lexical evidence or comparison of texts, or whether they just took every instance of either form as "dragon," based perhaps on translational traditions before them.