It's not fried any more, haven't you seen the recent adds? It's grilled!
As far as usage of terradons, I think there are people who will have more experience with the unit than I have. In truth, I've used them in small games only. I did take a moment to compare the 6th edition terradons to the 7th edition ones offering a slight tactical analysis on the changes.
Points Cost: -5points
Terradons are now down 5 points/model from the previous version of the book. Looks to me like GW wanted to adjust the points value down considering the following changes. A solid move, from my point of view.
Damage/Round (CC): 3ST4 atks down to 1ST4 + 1 ST3 atk
This is a significant nerf which eliminates a role for the terradons that I used them for from time to time; Helping break a unit of infantry with extra CR via wounds. Ultimately it has limited affect on the primary roles that this unit is frequently used for, making it slightly harder to break a war machine crew, but does give the enemy the assurance that more often than not, Terradons will not be charging them in the flank or rear. At this point it doesn't appear that the SCR generated from the doubled unit strength makes up for the loss of DPR (although I haven't actually calculated the math).
Hit & Run: eliminated
The Hit & Run rule is no more in the new book having a few interesting effects on Terradons, but once again not seriously affecting their primary role on the battle field. While eliminating an escape route for terradons in the above mentioned scenario (charging infantry), this rule seemed to bog down the game for enemy players unfamiliar with it. Replacing this rule with the Flying Cavalry rule from the rule book was a solid move. Now when Terradons flee, they can be persued which slightly lowers their survivability despite their high 3d6 flee roll.
Armor Save: No Change
While technically there was a change, the over all effect is the same. Instead of a special rule for being 'mounted' laid out in the 6th edition rules, Terradons recieve the Flying Cavalry rule from the BRB allowing for the same save. The means by which the save is acquired is now more standardized and easier to understand. Slightly less gameplay bogging?
Flying Cavalry: from BRB added
Giving this rule to Terradons standardizes them as a unit across the warhammer would and allows for predictable results and easier explaination to enemy players. The terradons now use this rule to pick up their armor save along with their 'fast cavalry' like reform after fleeing (the poor mans "Hit & Run"). The biggest change here is of sigificant advantage to the LM player allowing this unit to run interference behind enemy lines as units break from combat via the "Cross Fire" rule. Flying Cavalry, essentially doubles the unit strength of the unit bringing your average unit of Terradons up to US6, making them capable of parking behind units that may break and cleaning up the table. Another very handy battlefield role. Perhaps this is the expected advantage from trading out the S4 atks, forcing the terradons into a more 'flyer' like role.
New Rule: Drop Rocks
Once per game the terradons may drop their rocks inflicting D3 St4 hits on a target they have flown over. Unless my math serves me incorrectely, this averages 2x St4 hits per game from a single terradon, multiplied by the number of active terradons in the unit. So far, I've killed chariots and various other infantry targets with this new rule, although I suppose hitting warmachines would be equally as effective (although you run the risk of hittin g the actual machine since the hits would be distributed as normal shooting). Ultimately, this is a nice perk, but not a good enough reason to add this unit to your list, on its own. Having a unit of 3 Terradons, drop 3 rocks total, and not wounding with any, is a possibilty. Although you could be looking @ 6 wounds as well.
New Rule: Aborreal Predators
Tactically this rule doesn't really increase the combat value of the unit overall, but does give them yet another potential role on the battlefield. Terradons, now hiding in the woods can, chase units through woods, charge units in woods (provided they have LOS) and of course charge out of the woods (LOS again). This handy trick makes sense from a rules perspective and reflects what GW's vision of Terradons on the battlefield seems to be. It's advantage is difficult to measure considering that it is a situational tactic and you're not guarunteed forested areas where you want to place your terradons.
Leadership: +1
At first glance, I missed this change. After carefull examination and comparison of my two books, I was pleasantly surprised to find that skinks, brave enough to master the art of flying on a large 'lizard of prey' do in fact have better leadership. After coming across a lizardmen leadership post on another forums by Sammy the squib (thank you by the way). This gives Terradons a nearly 16% increased likelyhood of passing psychology tests. If there was a way for your to port the math from that post to a thread here Sammy, that would be excellent. Perhaps, you already have and I am unable to find it?
Skink Hero Mounts: A Skink Chief may now ride a terradon as a mount
Now you can tie one of your hero choices up in a unit that isn't good at getting into CC! Perhaps a T3 character mounted on a Terradon, carrying Staff of the Lost Sun isn't so bad, but it will insure that enemy units may be focusing on bringing an end to your high flying T3 hero. Perhaps Tiktaq'To has some uses, but I ultimatley dont' think I would field a skink chief this way, despite their buffs they picked up in 7th.
Perhaps I missed something at which I'll add to this post, upon request. As far as usage, their usage has changed significantly since the last incantation of the rules, but ultimately remains the same general idea. Just don't plan on using them in CC as like the above post says, they give up more CR than they provide. That in my mind is a significant nerf and I'll be using my leathery winged friends in less demanding roles for future games.