It's 7-to-1, your party should win. Eventually.

But you should expect at least 1-2 PCs dying in the process. The dragon's breath already does an average of 27 damage, which I believe is already more than some of your player's hp (assuming they fail their reflex saves). Not to mention if/when the dragon follows up with full-attacks.

To play safe, you may wish to use 2 very young blue dragons instead, and encourage the players to split up.