Dragon diplomacy has always been screwed. Should get fixed in the next version, but.
I wouldn't say BD-CO are openly hostile. Maybe if the Corsairs wiggle their way into the western part of Sigma 13 or the Southern parts of Honshu, but besides those points, I doubt there'll be any confrontation. (Unless ofcourse, one go's looking for it.)
If your one for RP, I also wouldn't base diplomacy on "Blood Dragons are buddehs with the Outcasts". Since that's basicly screwed too. The only reason the Dragons would ally with the Outcasts is because of the GC. But I assure you, every person who properly RP's a Dragon won't like the fact that he/she's allied to the Outcasts. Same for the NPC's. Just read the Dragon rumors.