This is like the urtext for two of my favourite fantasy films: MirrorMask and (to a lesser extent) Pan's Labyrinth. It's not as complex as either of those two films, however. The ending is particularly problematic, being a wholesale endorsement of make-believe as wish-fulfillment – the only way to deal with bullying is to escape into a flight of fancy where your pet dragon chases your tormentors into a skip.
The most interesting part of the film is the way it uses symbol to infer some rather unsettling ideas. The twin sphinxes as female sexual predators, their imperious gaze uncovering male doubt, annihilating male potency. The mirror which reveals the whimpering boy behind the all-conquering hero. More of that darker aspect of fantasy would have been welcome. But I guess there's only so much you can get away with in a film for children.