User blog comment:Masterpwn/Dragon stalker/@comment-1992639-20120622190720

Markarth's attack-event dragon is known to fly around way off the city, this is a bug. He can often be seen in wireframe-mode way off in the hills while you are inside Markarth. I'm guessing your Markarth dragon somehow flew so far off, that he reached the skybox (the end of the level) and thus respawned to the central coordinates of Markarth.

Actually that is pretty rare and awful to have happen. You should record it and show it to Bethesda, their developers would feel a little embarrassed probably about their NPC pathing. :P