Well, I agree with you that there that Dragon morph connection on Liu Kang's side. What I am not sure about this whole Dragon King thing is that dragons, at least in Chinese culture, are not considered evil. They are worshipped and feared, but not evil like reptiles (or in this case, Dragon King == Reptile). So I was a bit surprised that MK cast the Dragon King as a villain of some sort.
Perhaps there's some sort of a "GOOD" Dragon king that Ed Boon will unleash in MK7 that is related to Liu Kang?

hmm maybe good point

ooh, while we're on the subject of Onaga and connections, if you look at MK3's church/temple background, in the window with dragon logo there is a picture of a figure at the bottom which kinda looks like Onaga...just something I thought I'd bring up, sorry to stray off-topic....

OMG you're right ... I just looked at it and it DOES look like Onaga. Were Midway planning to bring in Onaga/The Dragon King all along?

Somehow I doubt that, when they released Mortal Kombat 2 in 1993, they were thinking of linking Liu Kang to a character that did not exist yet, nor did they even have any planning of.