Maybe. The Bloodstones might be out of Dragonblood yes. But the mental projetion of characters makes little sense to me especially since Livia knew Isgarren and the wizards way before Aurene was born. For the illness/madness of Dragons I think void/the accumulation of, non nativ, magic over time is to blame. Altough Aurene beeing able to use Palawas magic and not suffering from any side effects is not logic at all.