t all comes down to this, the final confrontation with Gnasty and then breaking into his treasury and reclaiming the last of the dragons' loot from him. And that means you finally get to really fly outside of a flight level. Oh, yes.
1) To defeat Gnasty you must chase him until he stands on the platform he ends up after he first takes off running, and flame him. You have to be right on his tail to burn him before he squashes you with his club. He'll take off again, through a new door, if you're successful. Follow him, jumping on each platform QUICKLY and flame him one final time in the last room. The bad news is that, after finally catching him and burning him after running all those stinkin' loops of the industrial plant, you're pretty much guaranteed to lose him the first time you chase after him to get that second flaming in. Sorry.
2) The second trapped dragon in the Gnasty's World home level only appears (where the first one was) after you kill Gnasty.
3) READ THIS TIP! Yes, you must have both all the gems - including the ones from the "bonus" flight levels (shouldn't have decided to come back to those, should you?) - and all the dragon eggs to get into the Gnasty's Loot level. That's what they mean in the first ending when Spyro says he has more treasure to get.
4) The thieves in Gnasty's Loot are great pilots and it's almost impossible to flame the first one by taking him head-on. Follow him and stick to it; you'll get him eventually.