This doesn't seem properly "Dragony" to me. The ability is reminiscent of "Kiki-Jiki, Mirror Breaker", so I can't really say that the ability is broken. On the other hand, in order to ensure that this dragon doesn't always have a huge creature to target, you had to decrease its power and toughness to levels below that of typical dragons. I think that the ability is workable, but not right now. If you want to keep the idea, I'd say it has to go on a smaller body -- generally, be more like Kiki-Jiki. On the other hand, if you want this to be a dragon, the ability has to go. You might use something vaguely similar, but the copy mechanic isn't appropos.
Perhaps you could make Rumatha bigger (5/5 is typical) anbd give him an ability like this:
{R}: Put a 1/1 red Flame creature token into play. Use this ability only once each turn.
Rumatha, Firesculptor gets +1/+0 for each Flame you control.
It may be necessary to make the Flame tokens 0/1's. This preserves the idea of Ruatha sculpting creature tokens, but also does so in a way that emphasizes that the creature is a dragon.
