How can you kill Icasaracht without wipping out your entire party. The best that I have been able to do is wind up with one survivor. I have tried everything, vexing armor, lightning, wands, fire arrows, swords, confusion, etc., but still everyone in my party dies; plus it doesn't seem that you can leave the area to get healed during the fight. What is the trick to killing this dragon and it's soul?

Spoilers, obviously enough...
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There's pretty much two tactics people seem to use... the first is to focus all firepower upon the dragon and put it down. The second is to kill off all the helpers and then put down the dragon.

In either case, you typically slow down the enemy with spells (web, snare, death fog, etc) and summons. Myself, I go with the kill the helpers, then polish off the dragon strategy. If you go in with mass invis, you can back off a bit after talking to the dragon (though the moment you go vis, they come for you). Then, AE spells of all sorts, from ensnare to web to fireballs... well, no ice ones, as they don't hurt the dragon. Throw in a few summoning spells to keep the bad guys busy (I prefer quantity over quality... unless the quality is stalkers from a druid). For the rest, cold resists and keep your guys spread out a bit. Low hp characters like Wizards get hit hard by the dragon breath, so try and keep them out of the way. The dragon will tend to breath upon the closest person (who should be a nice hp fighter, preferably a paladin due to their better saving throws) and after the breath, you can dash in your healer to heal them and then move the healer out of breath range again. By using summonings to keep the bad guys busy (or a stoneskinned mirror imaged tenser transformationed fighter/wizard), a few casters trashing the whole area, and the rest using ranged weapons (goblin arrows and fire based ones are the ones I like best... hope you got a crossbow guy to use all those nice fire bolts), you should be able to clear the place up pretty well, especially if you have more than one big AE caster (wizard, bard, druid). Once the dragon is dead, you can finish off the soul gem without too much trouble by sending in your toughest remaining guy, any summonings you have left, and having the rest of the party use ranged weapons.

If need be, stock up on heal and ressurrection scrolls. I believe you can buy them from the cleric right outside the temple.

Or... you can be a cheapie like me and just summon Chalimandren. He's immune to the claws (normal weps) and the ice. So, just let him kill her. It's quite fun to watch.