Yeah, this is all on those adventurers (?) who refused to explain anything. Ja might not always be the sharpest tool in the shed, but he acted appropriately and reasonably in this situation. Adult adventurers trying to kill a young child and then refusing to explain their reasons, that's all them.
In terms of Ja's power, yeah, it took a big dip when he transformed, but IIRC they said his power would gradually come back, and he'd eventually get the ability to return to his dragon form if he wanted? I may be misremembering, but he certainly got more powerful when he got the ability to dragonify his hand.