Actually, I'd think the most "challenging" method of taking on the red dragon would be to send in a single tanked up fighter to to the job.
A note on using lots of traps on the dragon...
I believe that if you kill the dragon outright with nothing but traps you MAY not get any XP.
2nd Note... do NOT disintegrate the red dragon. You may disintegrate the treasure as well.
3rd note... the point in summoning creatures in this battle is not really for cannon fodder (at least using my combat strategy), but to provide more firepower. Fire elementals and Aerial servants can kick some serious dragon butt!!!
4th note: Arm all fighters with any and all anti-dragon weapons and fire-resistant items.
I personally find the best non-cheesy method of taking on the red dragon is ...
a) summon the toughest creatures you can
b) cast all of your best buffing-up spells and potions (Resist Fear is important)
c) make the party invisible (druid Pixie dust spell is great!)
c1) Save your game at this point.
d) place your fighters and summoned monsters next to and around the dragon
e) have all melee fighters attack at the same time from surprise
f) after the dragon turns hostile, cast Insect Plague, if you have a druid
g) throw every last bit of firepower at the dragon (Cleric spell Holy Smite is great against dragons!!!)
h) have your mage(s) cast a Breech spell the moment the dragon successfully brings up a stoneskin
This straightforward, kick'em in the teeth strategy will always get the job done. There's always a little bit of luck involved (i.e. saving throws, to-hit rolls, etc.) so you may or may not have to reload, but it will succeed.
So... for whatever its worth, that's my dragon-slaying strategy. This bad-ass red dragon is completely beatable, even early in the game, with a little patience and good tactics.
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