You don't have to kill it at all. There is good loot available, and the scales of the dragon can be made into exceptional armor by the armorsmith (Master Wade in Denerim). If you so choose, you can definitely come back and try it. The best armor against it, however, is the armor you make from its scales. =P
Assuming you're a decent level, with good gear, the fight isn't too hard. Quaff some warmth potions, and beat the crap out of it. It's basically the same fight as the archdemon (so a good practice run) except not as tough, and without all the jumping around that the archdemon does.
Healing is critically important, so you know, make sure you've got Wynne, and that she doesn't get eaten early.