Quote from BioWizard >>

Either way, kill the party because you need to start a new campaign without the leader of the group.

If this is the goal, then I think it is far better as a DM to say something like, "Well you guys have made this campaign not be fun for me so let's start another one or someone else take over as DM."

The players need to understand that their refusal to act like protagonists, and instead to "turtle" inside their castle as literal cowards (not just hiding but hoping for someone else to come by and be the heroes) is not acceptable to the DM, because the DM doesn't want to run a game like that. The OP says the head PC thinks of himself as a "selfish Batman" -- that is an oxymoron. Batman was not selfish and there is no effing way Batman would sit in the batcave while the Joker or the Riddler or heck even Darkseid was out there screwing with Gotham City. The PC is not being a hero. He has literally become a villain -- someone who hides in his fortress and lets other people take the risks instead of himself. That's what the bad guys do.

One thing the OP could possibly do, though frankly I probably wouldn't, would be to make up the heroes who beat the dragon, and hand the character sheets to the PCs and say, "OK tonight we are going to RP out the other heroes who came to save your butts from the dragon." Make sure the PCs are strong enough to win the fight. Show them how much fun it can be to fight a dragon in D&D. (There is, after all, a reason the game is called "Dungeons and Dragons" -- it's named after what people thought, and many still do, are the 2 most fun activities in the game.)

However, this feels a little too much like a reward to me, and there is the risk that it could backfire -- if they don't play competently or dice rolls go bad, and the hero team dies, the coward player will say see, I was right, there's no point to fighting this dragon.

I still think the best bet at this point is an OOC solution. The DM is not having fun. This is a road to disaster. The campaign WILL end if the DM is not having fun. So the DM needs to explain straight up, this is not fun for me, and if it keeps up I don't want to play anymore. The players don't get to make the DM miserable.

Its resolved.  Leader called me up... I am quasi suspicious he may have read this thread based on his timely contact... (looks around suspiciously).

Basically its roleplaying gone haywire mixed with some misunderstandings.  Leader based his actions on some lore I sent him about dragons in my world.  He tailored his insults and provocations in detail thinking they were perfectly designed to drive the dragon bonkers and it would eventually attack them directly giving him the best, safest chance to kill it.  I explained OOG that no matter how mad he makes it, the dragon won't make a suicide run against them.  And it will just continue to escalate... if attacking villages doesn't work, it will find other ways to torture them until they come out of hiding.  He advised then that he still would not take the field against the dragon of his own idea, but acknowledged if the other players or any NPC's apply pressure, he would grudgingly put a plan together and go kill this thing.  So it looks like we have a path to solution.  

Also, for the record I would not call the leader a bully of the other PCs.  Rather, they are just SUPER passive.  They will tell me in private something they want to do, but as soon as the leader suggests something they immediately drop their own ideas and defer to him.  He has even badgered them to be more assertive but even when they push their own plans, they run everything past the leader for approval.  

As always, I appreciate the feedback.  I can still use some of it....

It's good that you have had a solution, and that it came from the players and not from you having to intervene.

My favoured options for solving this:

1: The dragon makes a plan for assaulting the stronghold - he won't just do it alone, he might hire an army, or turn the local population against them, or lure a purple worm to undermine their foundations. But if the players have spent a lot of effort in dragon-proofing their fortress and planning a perfect approach to killing the dragon, it would be something of a shame to not indulge their efforts in some way and have the dragon attack - but with a twist.

2: The dragon takes a local beloved princess (or whatever) hostage and holds her to ransom against the characters. Cue an angry mob.

3: The dragon uses their many contacts in the local area (along with a disguise self spell to travel unmolested in human form) to make the PC's out as villains, putting bounties on their heads, making them public enemy number 1.

4: The dragon hires every hitman in the area to compete to bring them the heads of the PCs. 

5: Siege, but the dragon uses some artefact to project an antimagic field onto the stronghold, so no magic food for them!