I have an example from the early modern period, if you'll have it. It still contributes to the "what did they think of them" part of your question.
In 1676, Robert Plot published the first scientific illustration of a dinosaur fossil, in his book, Natural History of Oxfordshire. It's online here, the part discussing the fossil starts around page 132 and goes on for many pages.
And that indeed there are stones thus naturally fashioned, must by no means be doubted... [but] none of them, as the judicious Charles Marquess of Ventimiglia well observed, [have] any signs of hollowness for the place of the marrow, much less of the marrow itself. Which has fully convinced me that this stone of ours was not so produced, it having those signs exquisitly expressed; but must have been a real bone, now petrified...
But against this opinion of its having been once a real bone, there lies a considerable objection, viz. that it will be hard to find an Animal proportionable to it, both horses and oxen falling much short of it... If so in probability it must have been the bone of some Elephant brought hither during the Government of the Romans in Britain.
But... there happily came to Oxford while I was writing of this, a living Elephant to be shewn publickly... with whose bones and teeth I compared ours; and found those of the Elephant not only of a different shape, but also incomparably bigger than ours, though the Beast were very young and not half grown. If then they are neither the bones of Horses, Oxen, nor Elephants, as I am strongly perswaded they are not, upon comparison, and from their like found it Churches: it remains, that (notwithstanding their extravagant magnitude) they must have been the bones of Men or Women. (pg 136)
And then he goes on for many more pages discussing various historical and biblical accounts of giants, and concludes that yes, since it wasn't an elephant bone, it must have been from a giant human. The fossil in question was only the end of a femur, so you can understand why he didn't jump immediately to "giant lizard."
As a reminder to everyone, be sure to check out the rules for answers. Answers should be non-trivial and more than suggestions for sources (unless, of course, the OP is asking for sources specifically). By all means, use sources to construct your response, but don't rely on them to explain your answer for you.
I'm posting again in here because there haven't been many answers— On the subject of dinosaurs and China, the Encyclopedia of Dinosaurs reads,
This is the sort of thing echoed in countless dinosaur books, but I can't actually find the part of the primary source that discusses these dragon bones, so I can't tell you anything about the reaction to them. Maybe someone fluent in Chinese would be able to search for the specific section about them and post it? Wikipedia has links to the complete Chinese text.
Yes! There's in fact a ancient grecian vase that clearly shows a dinosaur skull on it. It was hypothesized that the Greeks used dinosaur bones to prove the existence of their ancient heroes.
Herodotus wrote about finding bones of small and large winged serpents. The bones were uncovered in the deserts of Arabia, one can today wonder if the bones were buried in the sand and revelead themselves after e.g. a sandstorm.
The Arabians told him that these winged serpents were a common sight there. But Herodotus only saw the bones and does not claim otherwise.
http://www.theoi.com/Thaumasios/OphiesPteretoi.html
Maybe dino-bones? Whale-bones have been discovered in deserts, so maybe something similar?
