Oh man, I am SUCH an idiot. I’ve always kinda wondered about Toothless’ flashy tail fin, and now I finally Got It. It’s not something Gobber designed to look cool or tough or scary, like I first figured. It’s an insignia. The color and skull design are supposed to indicate that Toothless is a hero, and that he defeated the Red Death.
Well played, DreamWorks. Well played.