That does make a bit more sense. Though, it doesn't answer how the baby dinosaur got there either...it's depicted as an ankylosaur. Penny is also riding on her Tenontosaurus companion when she rescues Muldoon...not sure how well he could fit in a submarine, even a big one =P
The idea does hold water (...ha) though, because there are underwater tunnels in Dinotopia's world beneath, mainly to the sunken city of Posidos.
Plague, in my mind, holds water too, since the biggest culprit, besides fleas on the rats, was bacteria, combined with a lack of immunity to find it...I'm pretty sure that of all the people in high-quality living (their quality of living might even be better than those in the western world) , they would be the most vulnerable to plague.
One of the biggest dinosaur threats I can think of is one of the Spinosaurs from Sorna, which starts beating the crap out of pretty much every large predator on Dinotopia. Including other Spinosaurs, which I think of as being the most benign of the big ones there, and even have some involvement with the lives of humans...mostly in keeping the shores safe. It's gotta get there somehow, as well as the Sorna Velociraptors, Diloposaur from both, and the Compys.