I believe that the dragonmounted character is unable to enter the wood (because the dragon is a monstrous mount) and therefore is forced to join another unit within 30cm.
If unable to do so it would be destroyed just like a unit forced into impassable terrain (like woods for cav and monsters). [/quote]
you are right! The way we was playing our games is: if a monster is force to enter in wood by fall back when fighting hand to hand (not by shooting) is destroyed.
As the monster-character has the same fate as the unit it was attached, the monster-character must end inside the woods, so it is destroyed.
If unable to do so it would be destroyed just like a unit forced into impassable terrain (like woods for cav and monsters).
I did not contemplate this possibility, but you are probably right. I need a revision of the rules.