I tried something similar and didn't really get much mileage out of it.
Blue Dragon, Water 9, Dominion 4.
Order 2, Luck 1, Magic 1
Fortress
I'd prefer the castle, but it left me with Order 1 and 24 pts left over.
Dominion is a bit low for mass producing sacred troops. I was hoping cheap temples would help here, plus Dominion is expensive for Pretenders starting with 1. Perhaps I'd be better off tweaking to get higher dominion.
I had several general problems. The Sidhe warriors are great at staying alive, but not very potent! They're also fairly vulnerable to missiles, without anything really stellar to use as missile bait.
I had better sucess in a short test using the Red Dragon instead. The sidhe were still fairly surviveable, but now had some potency. The Red dragon also worked better for expansion, due to a combination of a strong Fire Shield, and not missing attacks. The Blue dragon finished off it's opponents too slow, and thus got hurt more often.
The magic scale isn't really stellar as Tuatha's cheapest mage is 140. Plus I felt compelled to take Order, which minimizes any benefit from luck. My main fear with this race is that it's a little income poor, and while it's troops can be effective against independents and AI, it feels like it has weaknesses that real opponents would capitolize on. It also doesn't really have good troops outside of the Sidhe.