It's a misnomer that depends on DM Fiat.
Many dragons who follow the Thir faith seek to emulate one of the Sovereigns. By embodying a Sovereign in life, a dragon hopes to ascend and assume this role after death.
Pursuing a Sovereign archetype is a lifelong goal, and it is refl ected in a dragon’s behavior and outlook on life. Dragons are still individuals; one loredrake might be dry and serious, while another is cheerfully manic. But both are utterly dedicated to the pursuit of knowledge. As such, the choice of a Sovereign archetype should provide a DM with a thumbnail sketch of a dragon’s motivations and personality.
All true dragons have the potential to use arcane magic. Most have the ability to select spells from the cleric spell list and certain domains. This variant rule instead provides a dragon with a special ability based on the Sovereign archetype it chooses to follow. This special ability replaces the optional spell selection abilities a dragon normally possesses; as such, a silver dragon that adopts the child of Eberron archetype can no longer cast cleric spells or those from the Air, Good, Law, and Sun domains. Those wholly unable to cast cleric spells (black, green, and white) lose nothing when they adopt a Sovereign archetype.
Dragons don’t have to follow archetypes. Indeed, many of the archetypes require training and discipline. If the DM uses this rule, he must decide if dragons that do not have an archetype can gain access to cleric spells as described in the Monster Manual, or if such dragons are limited to standard arcane magic.
Yes; True Dragon is stated first. True dragon would lead one (A DM specifically) to assume Chromatic or Metallic. But "A Dragon" is stated in almost every other sentence/paragraph.
However, the entire premise is based on "DM." Forums can, and will, dispute every single word of every single sentence. Remember that Dungeon Masters/Game Masters are the final arbiter of his/her games.
As a DM, I believe this rule-set is for ME. To allow Dragons, in my game, as NPC's/Monsters to have an optional set of spell-casting/special ability choices, rather than "cast spells as X level of sorcerer."
As a DM, You can believe that this option is available to those that are "dragon," as in Dragon Type, or those specifically listed as "Dragon, True." I would be inclined to believe that one should reserve this special rule-set to be limited to True Dragons. Letting "lesser dragons" choose this alternative path, will make True Dragons seem... rather ordinary... and less special for being what they really are... Dragons.