They call themselves the Great Imperial Order of the Dragon. Say that they are a secret sect of the Second Empire, sworn in those days to the protection of the Emperor. With the empire fallen, they are bound now by sacred oath to fulfill its rebirth. They go about in red hoods and robes, faces obscured, horse-hair plumes in the breeze, torches in hand, to strike terror into the hearts of the enemies of their Empire-Yet-to-Be.
There were mystery cults throughout the Second Empire, that is true. They died with their practitioners during the Plague Years, and all that's left are trinkets in display cases and symbols long severed from their meaning. Even with such slim reference material the Dragon Cults bear no resemblance: Not in their garb, not in their practices, not in their symbols. Any student of history, and not even a diligent one, could easily find a litany of inconsistancies and missing connections.
But to make the claim fervently enough, spread the rumor wide enough, that gains them legitimacy. If one's target is the disadvantaged to begin with, it doesn't matter how easily it can be disproven by those who are more able to do digging. The cult puts a good deal of energy into obscuring the truth of their own history, and that more than anything else is their power.
So let us unwrap them.
The Day the Sun was Eaten
The last emperor of Tlan, heirless and impotent, died during the totality of a solar eclipse. Right in his bed, choking on the blood and phlegm filling his lungs. Coincidence, of course. Bad timing. Perfect timing.
In the Solar Church, the sun is the spiritual lodestone of the universe. Everything else - gods, humans, the world itself - can only exist thanks to the emanation of the sun's spiritual power. Those with a greater attunement between their own souls and the sun, naturally, inherited more of that spiritual power. Also naturally, for a civilization where church and state were so tightly twined as the Second Empire, it was the emperor who possessed the greatest share of spiritual power. If times were good, the sun blessed the empire and its ruler. If times were bad, the emperor had clearly lost the sun's favor.
Eclipses were associated with the Dragon Hypokosmos, the Eleventh Lord. One of those old, old beliefs, logical in their way - a dragon eats the sun and spits it back up again. Bakunawa fills the same role elsewhere in the world. The Solar Church used the Dragon Hypokosmos as representative of all that is evil in the world (above all else, it was a traitor to the other dragons, who were rightfully blessed by the sun)
So you can see where things go wrong. The head of the church, the only person considered holy enough to serve as consecrated conduit of the divine, dies at the moment the sun is symbolically consumed by the forces of darkness.
The Age of Changes
The Plague Years and the War of the Bull decapitated the Church's political structure; the following period of contentious reformation saw dozens of sects suddenly swept into the power vacuum - most to evaporate swiftly. The party that would eventually establish itself as the majority (with the political backing of Draga and its thrice-removed imperial bastard) interpreted the omen as saying that there was no more need for the sun to have a conduit on earth - the sun shines upon all, doesn't it? The empire's collapse occurred because it had fallen away from the duties of its special selection. While theologically radical compared to what came before, the Reformists were structurally moderate, and much of the Church's surviving organization was carried over (in the Dragan style, of course)
One of the core beliefs of the Dragon Cults (though not the cults themselves) emerges in this period - in non-Reform sects, it was commonly believed that the sun's spiritual power had been eclipsed and that the world was now governed by the Dragon Hypocosmos (manifested in the loss of the Empire). While technically considered heretical (or at least highly heterodox), in certain regions (noteworthy for us, the Low Country and Dragon Republics) the belief has merged back into the mainstream somewhat. The political aspect of this belief (the loss of empire = the loss of the blessing of the sun = the loss of the right ordering of the world) is rather on the nose, and central to the Cult's ideology: members believe it is their sacred duty to hasten the restorative rebirth of the Empire in its third and final incarnation, to sweep away the corrupt and wicked world and usher in the new.
The Actual Point of the Story
The War of the Bull dismantled the infrastructure of the Imperial occupation of the Hespermontane Low Country, but it did not eliminate its influence. The Maid kept to her word that those who manumitted their enslaved would be spared, and those that did found themselves adrift in a new society, stripped of the wealth and power they had held for generations. Most were, over time, absorbed into the cultures surrounding them. But those who still maintained some measure of influence, made a point of pride in toeing the line, in holding on to the remnants of imperial occupation to the greatest extent that others would tolerate.
So it was for the first few decades of rebuilding in the Low Country nations. A simmering mixture, but not yet ready to serve to table.
The boil-over point would come with the arrival of the Necromantic Socialist Republic as a major power. For those who still clung to the identity of the imperial land-owner, the NSR was anathema: non-hierarchical, utopian, socialist - and most damningly new, popular, and successful. The necromancy was more an excuse than anything. Easy to scare poor folks by painting threats of undead hordes just over the next hill.
Finally, all pretext done with, we have reached the origin of the Dragon Cults: An excuse to lynch necromancers.
The more cultic aspects were added later - the standardization of the uniform, the direct integration of necromancy into their belief structure as an enemy. Certain schools of fad occultism popular among the wealthy of the Dragon Republics - grand secret histories of the First Empire and mis-interpretations of the atûm-rama practices of An-Hehm - were adopted nearly as soon as they were introduced. Distrust of the NSR's allies (Bensael and Orlei, most notably) goes hand in hand with all the rest. Further radicalization is a natural course of affairs.
The Cults Today
The influence of the Cults varies with time, a sine wave of hate and violence. It had already been on an upswing when the Black River War broke out, and the resulting destabilization of the already-tenuous balance of the Low Country provided ample fuel to the Cults. The end of hostilities has not changed matters. Widespread economic hardship left a lot of folks looking for someone to blame, and that's great news for those willing to point the finger.
Most concerning at this juncture is Gen Temmaren. Temmaren began his political career in the Commonwealth Assembly as a saber-rattler in the buildup to the Black River War, and his populatirty swiftly grew during the conflict and afterwards to the point that his supporters now form the largest single voting bloc within the assembly (outnumbered, at least for the time being, by a coalition of other parties). Central to his platform of conspiratorial militarism is the idea that the Coal Dukes and NSR, aided by northern cities and lilu jacobins, will launch an invasion of the Commonwealth in hopes of destroying it completely. The Commonwealth's traditional allies in the Low Country are side-lined for treaties favoring the Dragon Republics (agreements Tammaren claims will combat the economic depression, but have only increased the existing disparity). Increasingly-violent calls to action - both in preparation for this imagined invasion and removal of "subversive elements" from the Commonwealth - are a mainstay of his speeches.
Whether he actually dons the hood or simply favors them because their actions further his own goals is irrelevant - the Cults have a friend in Temmaren, and they're the boldest they have been in generations. Lilu and necromancers in the Commonwealth and even outside have found themselves threatened, assaulted, killed. The Coal Dukes suspect a return of hostilities they cannot afford to resist. The Order of the Sable Maid finds itself unwelcome in territory it has long patrolled. Outside observers fear a coup, or a civil war in the case of his assassination - both options made worse by Tammaren's sworn sorceror.
Worst of all - Temmaren has indicated that, if he should become chancellor, he would pull Commonwealth levies from the Dispaterian DMZ. This would leave the barrier against Dis critically undermanned - potentially weak enough for Hell to breach through and usher in a second War of the Bull.
That is, if it does not emerge again in the heart of the Commonwealth before then.
Oh, wouldn't the Cults love that, to sit at the feet of their beloved Darvatius?