Since Kingsnake insists on using an "old school" bulletin board style message board I respectfully request that all you Frilled Dragon enthusiasts read my response to an old topic. It may be useful.
Original post located at:
http://forums.kingsnake.com/view.php?id=440099,440099
My thread response located at:
http://forums.kingsnake.com/view.php?id=440099,513333
For all the lazy people out there I will also add my response here:
Sorry to resurrect an old post, but I have recently had some success in treating this condition.
I recently became a manager of a small pet shop and there was a small pair of frilled dragons (one of them not much bigger than a hatchling), the smaller one had a horrible eye condition which sounds much like the original posters problem. Crusted eyes, pretty much swollen shut. Daily soaking in a small rectangular Tupperware with enough water to reach the animals' front shoulders for about an hour to allow for a humid environment. The water was about 90-95 degrees, and the Tupperware was long enough to allow for the length of the animal (basically a Sterilite shoebox with holes in the upper rim to allow for ventilation). The soakings were followed by a couple of weeks of letting the frilled get about an hour a day of natural sunlight while soaking in a large cat pan, with a shady area allowed for the lizard to thermo-regulate.
After about a two weeks its eyes began to clear considerably, and instead of having to force-feed (since it couldn't see to catch its own food) he/she began to catch crickets on its own, and pinky mice were offered every few days. Once it could see again after the soakings, the frilled showed remarkable improvement. I removed the horribly dusty substrate material (which the former manager insisted on keeping nearly all of the lizards on) and replaced it with "repti-bark" and kept that substrate somewhat saturated with water (read: I actually misted the poor guys so that they could drink the droplets, which in turn also hydrated the substrate).
After all of this care I got a bit of the "Florence Nightingale" syndrome" and decided that I had to buy these little guys and bring them home (after LOTS of research). I am currently building a cage that is 6'H, 3.5'W, and 2'D. Once this enclosure is completed I will bring the pair home and care for them (later this week). My home doesn't have A/C and I live in Florida, and the conditions are nearly perfect for most snakes/lizards. It isn't perfect conditions for humans but all of my snakes and lizards and arachnids LOVE it. A T-rex or Powersun mercury vapor bulb will be the main source of heat/UVB with ceramic IR/incandescent/tube UVB fixtures and lamps installed to adjust for seasonal changes.
This hasn't been a cheap endeavor in the least, but it has been rewarding beyond any of my other herp rescues to date. These lizards have as much, or more personality than bearded dragons (I own a bearded dragon as well). It only takes a couple of days of having a rapidly recovering frilled trying to jump onto the top of your head to endear them to you.
Most dragons apparently only need a few weeks of careful care to bring them back to near perfect conditions. I'm not saying my experience would cure all frilled dragon problems, but for the problems these animals had it has made an amazing difference...
Frilleds deserve as much care as you are able to give. Maybe more...
