I don't think it would have to be hard for the tattoo, just really stretched out. It would bleed too much if the dude had a hard on...how the fuck could anyone keep it up anyway? Even with Viagra? The only way I could think of is with a tourniquet, but still, I don't think you have to be hard to get your dick tattooed.
If you were hard, you'd bleed like a mutherfucker. You'd bleed anyway, but there's no fat layer on a penis...the needles do not go as deep as you think they would, but a dick has got real thin skin. I really don't know, though... just hypothesizing.
Now you got me thinking it's fake. I've seen other people with their cock and balls fully "sleeved"...heh heh heh so it wouldn't be impossible. The work around his fat pad looks real, and it's an original idea at least, fake or not.
All he needs now is VD so his "dragon" can spit fire!
I'm sure most women would rather have one "dragon" on the floor than an actual dragon tattooed on your dick.