That sounds metal, but I do not think that it's very plausible, for two reasons: first, the dragon was said to have been red, not black. I know it sounds somewhat silly, but color-coding is traditionally important in henshin plots. Secondly, while this page clearly shows that the BK armor corrupts its wearer in some way, it's quite a leap from there to turning into dragons. If the previous BK turned into that dragon from wearing the armor, I do not see a plausible sequence of events of how that armor ended up with Frost. IMO it still makes much more sense that the prev. BK was defeated by the dragon (possibly weakened by the corruption), and Frost took up her armor in her honor. She did not have to kill her mentor with her own hands to be traumatized by her sudden and gruesome death.
None of that is much of a narrative obstacle imo, nor is it particularly contradictory to my proposed theory.
Given that Frost summons her armor and it appears bonded to her beyond being simply something she wears, it's not unlikely it can change/is defined by the wearer to some extent, possibly even being a literal manifestation of the wearer in some way. (Curse? Hereditary power? A seal against great evil passing from vessel to vessel?)
Her predecessor's armor may simply have looked different from hers, such as incorporating more red into the design, because she was a different person; or it may have even been a different armor "set" altogether and each "Black Knight" manifests their own design.
Furthermore, it's also possible that turning into a dragon made it more red to be further representative of the wearer having lost control and becoming "corrupted" by literally shifting the color scheme, and her actual armor wasn't as red as the dragon.
Your other "points" are indirectly already explained with the above possibilities.
Actually, the more I think about it, the more I'm starting to think I might be onto something because pieces fall into place quite nicely. For instance, why the (still unseen) king has gone out of his way to order by royal decree that the Black Knight has to marry someone.
That's an incredibly unusual and suspicious decree, certainly not something a ruler would ever do outside of extreme- or specific circumstances, and strongly suggests that either the King has a personal relationship to Frost or she is of truly immense importance.
Like, for instance, being a Barrier Maiden holding off an evil force and thus inherently requiring an eventual successor... for example an offspring?
Calling it now: Frost is a Jinnchuriki.