The overall quality of the art piece is outstanding. I do agree with your initial observation that she appears more draconic than necessary. However, the draconic characteristics invoke greater feelings of terror and fear, and add copious amounts of an evil appearance to what is already perceived as a villain.
It does not, however, give a very good impression of a "transformation," looking more like an intentional halfway mark. in other words, it looks more like an intentional mix of draconic, changeling, and pony makeup to create some sort of horrifically frightening creature that would scare anypony into a state of irreversible insanity, rather than fluid transformation from a changeling queen to a pony princess.
The lighter patches on her skin are what I assume is Cadance's fur, rather than scales. The scale-like appearance could be avoided if drawn with more fluid motion, and if more patches were faded to look as though they are "appearing" from her skin. As it stands now, the blocky nature of the patches give the fur a more scaly look, and thus give Chrysalis a more draconic feel. Well, that and the mouth full of sharp teeth.
In summation, while this does not invoke a "transformation" sequence, it does scare the the living daylights out of me. Excellent work.