It's the last battle, where all of the Dragoons but Rose and Damia die (though Zieg gets better). Damia isn't seen in the cutscene, so it's kinda assumed she died earlier in the war, but it's all conjecture. Link to that cutscene here (http://www.youtube.com/watch?v=CSKFEs5wrvk). It is also the battle where Melbu Frahma is killed.

For reference:
Dragoon transformations and magic (http://www.youtube.com/watch?v=Hh8lUeFEsS4)
Original Dragoon quest Part 1 (http://www.youtube.com/watch?v=scIkLb6KNbk), Part 2 (http://www.youtube.com/watch?v=SXN74Cs4CoY), Part 3 (http://www.youtube.com/watch?v=dGvbIZGEjpc); the script of which is under disc 4 story on thelegendofdragoon.net.
First meeting with Shirley, the original White Dragoon (http://www.thelegendofdragoon.net/story/script/script1.html) (search for Shirley).
Second meeting with Shirley, Fort Magrad and Vellweb conversation, conversations in Kadessa (http://www.thelegendofdragoon.net/story/script/script3.html) (search for "Forbidden Land" to find the last).

And I recommend having a look at some of the in-game sections in whichever places you're going to use as setting, to get a feel for the spaces. Vellweb Fort Magrad, and the Tower of Flanvel are near the end of Disc 3, Kadessa is a bit before (and is called the Forbidden Land), and the Birth City Crystal Palace is before that (Deningrad). The Magical City Aglis, the Law City Zenebatos, and the Death City Mayfil are all in disc 4.