I'd say, "there's more to it" but I've already done that a couple of times. I realize I'm touching on several different points here, but I'm trying to clarify what I believe to be the issue with Pygmy Allosaurus, and your comment about the etymology of "dinosaur" is only one part of that. You're reading everything I'm saying and interpreting the parts that aren't direct responses to your own words as irrelevant. I am not saying that you are wrong that the "saur" morpheme is derived from a label for lizards. You're right about that. But there are other details (such as the fact that it also referred to other, non-lizard, animals and the fact that the use of the morpheme in "dinosaur" originally came about due to a misconception anyway). It's quite a logical leap from "the word has a term for lizards in it" to "calling dinosaurs lizards is basically correct."
Also, etymology isn't meaning. Even simplifying the etymology of "dinosaur" to "terrible lizard" doesn't mean that dinosaurs are actually terrible lizards. That's just where the word came from. Similarly, "whale" comes from "sheath fish." But you agree that whales are not fish, right?
It's not just biology that gets names that only make sense in light of what some long-dead guy thought when he labeled things. Chemistry has some pretty bizarre nomenclature too. You know what formaldehyde is, right? But do you know why it's called that? Well, aldehydes were named based on the number of carbon atoms chained together, and formaldehyde is the smallest, with one. Traditionally, that meant the one-carbon adehyde was formaldehyde. Add another carbon atom to the chain and you get acetaldehyde. A third atom in the chain means it's propionaldehyde, and on it goes. Many of those prefixes were taken from carboxylic acids, and simply applied to other organic molecules. In the case of formaldehyde, the "form-" prefix refers to ants, and there's a genus of ants called Formica. The one-carbon carboxylic acid was discovered as a vapor coming from ant hills. So when the substance was isolated, it was named formic acid, and subsequently other organic molecules with the same carbon chain lengths inherited the name, which mean the one-carbon aldehyde became formaldehyde. There aren't any ants in it. It doesn't even have anything to do with ants. Another substance that's probably familiar, butane, got its name in a similar fashion: the carboxylic acid with a chain of four carbon atoms was named butyric acid because it was discovered in rancid butter (the Latin word for butter is "butyrum"), and "but-" became the default "4" prefix in organic chemistry, so four-carbon alkanes are butanes, even though butane actually has nothing to do with butter. These are just accidents of history, but the terminology can last for a long, long time.