Firstly, for reference, I think we are talking about this power here as indicated by Jason White
Storm Pillar
A crackling column of lightning appears amid your
enemies, lashing out at any who move near it.
At-Will Arcane,
Conjuration, Evocation, Implement, Lightning Standard Action
Ranged 10
Effect: You conjure a pillar of crackling energy in an
unoccupied square within range. The pillar occupies 1 square and lasts
until the end of your next turn. Each enemy that moves into a square
adjacent to the pillar on its turn takes 1d6 + your Intelligence
modifier lightning damage. Level 21: 2d6 + Intelligence modifier
lightning damage.
The way I read this power is as follows.
The caster creates a taller than wide column of lightning. This Column of lightning does not stand still, but rather moves back and forth, being attracted to enemies, and lashing out at them if they go near it. For this reason is "occupies" one square.
Now, for the Dragon, we need to look at the flying rules, and see if two flying creatures, or a flying creature and a non-flying creature can occupy the same "square".
The Entry for flying has the following:
Flying Flight Some creatures have the innate ability to fly, whereas
others gain the ability through powers, magic items, and the like. The
rules for flight in the DUNGEONS & DRAGONS game stress abstraction and
simplicity over simulation. In real life, a flying creature’s ability
to turn, the speed it must maintain to stay aloft, and other factors
put a strict limit on flight. In the game, flying creatures face far
fewer limitations.
FLIGHT Flight follows the basic movement rules, with the following
clarifications. (Emphasis mine)
Fly Speed: To fly, a creature takes the walk, run, or charge action but uses its
fly speed in place of its walking speed. A creature that has a fly speed can also shift
and take other move actions, as appropriate, while flying.
Moving Up and Down: While flying, a creature can move straight up, straight down,
or diagonally up or down. There is no additional cost for moving up or down.
Falling Prone: If a creature falls prone while it is flying, it falls. This means
a flying creature falls when it becomes unconscious or suffers any other effect that
knocks it prone. The creature isn’t actually prone until it lands and takes falling
damage.
Remaining in the Air: A flying creature does not need to take any particular action
to remain aloft; the creature is assumed to be flying as it fights, moves, and takes
other actions. However, a flying creature falls the instant it is stunned, unless it can
hover.
Landing: If a creature flies to a surface it can hold onto or rest on, the
creature can land safely.
Terrain: Terrain on the ground does not affect a flying creature if the terrain
isn’t tall enough to reach it. Because of this rule, flying creatures can easily bypass
typical difficult terrain, such as a patch of ice on the ground. Aerial terrain can
affect flying creatures.
Since it does not specify that two creatures who are flying may occupy the same space, or a flying creature can not occupy the same space as another creature (the way a swarm can), it seems to me that in this case, the Pillar reaches the height of the space that it occupies, and in this case that means the ceiling.
The pillar would occupy the space for purposes of movement even to flying creatures, as it occupies the entire square.
I believe the argument that it is as tall as it's range is not correct. And I think the argument that it only takes up 5 feet of height it also incorrect. There are plenty of PCs and monsters that are over 5 feet tall, and still only occupy 1 square.
Since the DnD game map is really 2.5 dimensions, and not 3, the effective height of the pillar is "infinite", or rather, it goes as far up as the space that the ground represents, goes up.