Balloon Ride
Once you reach Reza, head for the tavern and talk with Laike a bit, and then to the Mayor. He takes the Thieves' Guide from you and gives you the Thieves' Crest, which proves your membership in the Guild. It also...grants you the ability to open the Red Chests!!! w000t! But first, you need to exploit the last benefit it gives you, which is access to the Thieves' Market/Bazaar. On your way to the Bazaar, stop and talk to Lily, the Mayor's granddaughter. Talk with her until Jessica promises to play with her later. This makes Lily extremely happy and also unlocks a secret item later in the game. I could tell you now, but that spoils the surprise. hehe. Once you make you way to the Bazaar, talk to the weapon "salesman" in the northeast corner, who just happens to be the foo who stole your Dragon Wings. With Kyle threatening to kick his ass, he hands them back and gives you a bar of Soap to boot! Not too shabby... Before leaving the Bazaar, talk to the other people there and buy anything you think you may need before heading back upstairs (I highly recommend the Ice Sword).
On your way back upstairs, Royce is in the middle of abducting Lily!!! Just as you are about to kick Royce's cute little ass, the Mayor shows up to see what is causing so much commotion, which gives Royce an extra split second to warp away with Lily in tow. The wicked bit...witch also makes a prophecy about your certain doom before leaving totally. Of course, Royce isn't so smart considering she just clued you in on the fact that Ghaleon is about to enslave the Red Dragon next. The Mayor knows how to get there, and asks you to follow him to the market place. Of course, you accept, so follow him back to the Bazaar. When you arrive, talk with him and his blue-haired buddy. His buddy coughs up a Balloon Blueprint he stole from an inventor in Iluk. Which mean that Iluk is your next destination after taking care of some business...those darn Red Chests. (the link will open in a new window, so you don't lose your place. Simply close the window and read the next paragraph after your treasure hunt).
Once you have collected all the Red Chest items, warp to Iluk (if you stoped there previously) or warp back to Reza and walk to Iluk. When you arrive there, you'll notice that the people there are a tad...off key. Especially the man in the northeast house, talk to him as you'll be thankful you did later. After you explore, go into the house on the with the green roof. Talk with the inventor inside and throw the switch. Then, talk to the inventor and his sister to make Nall feel very guilty about his actions. hehe ^^. After that, walk into the northern house of the town and talk with Shira, Iluk's most sane and talented inventor. He thanks you tremendouly for returning his blueprints, and over the course of the conversation, he agrees to build you all a balloon, but he needs you to get one thing for him - a Fluffy Bug. You can explore the field to the west of his house to find one, but you have to get the Botanist's permission first. Easy enough, just take the steps going down outside and just west of Shira's house to get started. Once you have the botanist's permission, head back to daylight and enter the Iluk Field via the now unlocked wooden door.
Iluk Field is a great place to gain some (more than likely) greatly needed levels. And you won't have a good chance to do this again for some time, so make use of it. I suggest being around Level 25 or 26. This will help you in the coming dungeons. But for now, here is what you need to know about making your way through Iluk Field...
To get around the various parts of the field, you will have to utilize various springboards to jump across the ponds. Second, you will encounter some fairly tough enemies here, as they hit very hard. Here is the basic strategy you want to use: Priority numero uno, from the entrance, make your way northeast to the first springboard. Cross the water and nab the chest for a Healing Ring. Give it to Kyle (Alex should already have the one you should have found in the Cave of Trial equipped). Walk back to the entrance (or use a DragonFly Wing or Jessica's Escape Litany) and enter Iluk to heal up and then enter Iluk Field again. This time, go west from the entrance, and when the path turns southwest, take that path not the north one. Cross the ponds with the provided spring boards, and follow the path as is curves north. Grab the chest for a Crystal Bracelet for Nash, and then follow the bush line (get those sick thoughts out of your mind ^^) to the north. Don't bother cutting across the open area as this will probally put you in dire need for healing. So keep sticking to the north and west until the path gets to a 2nd large carrot sticking out of the ground. You can try eating the carrot for some humor from Nall and Kyle, and then make for the planting patch just northwest of the carrot. Now at this point, you should get attacked by some Puffy Bugs again. Now, odds are that you have seen the Fluffy Bug while fighting the Puffy Bugs, but it always ran away. After this fight with the Puffy Bugs, you should automatically trap and capture that darn Fluffy Bug. Don't forget to grab the treasure chest for 1500 S also. Before heading out, you have one more treasure chest to grab. Head due east and follow the short path into another clearing. Dart north to grab the last treasure chest, which holds a Spook Hairpin for Mia. Now you can either walk back the way you came, or cheat and warp out. Let your current health status be what you base that decision on.
Once you exit Iluk Field with the Fluffy Bug, head for Althena's Statue and heal up and save before bringing the bug to Shira. Also stock up on healing items, as you'll need them since the Red Dragon's Cave is by far the longest board you will have faced thus far. When you bring Shira the Fluffy Bug, he invites you to spend the night and in the morning after having a small issue with the Fluffy Bug, the balloon inflates itself and you are ready to head into the wild volcanic yonder! Just make sure you have everything you need, you can't come back until you find the Red Dragon. Board the balloon and enjoy the ride.