They assumed they'd found a creature that still existed, and they'd merely found the most amazing skeletons proving it.
Dragons are dinosaurs. People clearly understood what that skeleton would possibly look like in reality. They just didn't realize that those dragons were no longer around.
I saw a piece about the story of Chimeras and how they were possibly stories carried by traders from inside the arid regions of southern Asia, where skeletons of ....oh which one was it... stegosaurus? can be found exposed. Same thing. People assumed that these creatures existed because, they did. They just didn't exist recently.
The powers of observation of humans wasn't any less. They simply didn't know the Earth was 4.5 billion years old.
edit to add: I think that article was an article in Skeptic magazine in 2010.
edit on 2011/3/3 by Aeons because: (no reason given)

