DRAGON: THE BRUCE LEE STORY, with Jason Scott Lee, Lauren Holly, Nancy Kwan and Robert Wagner. Directed by Rob Cohen. Panasia circuit (original English version) and Gala circuit (dubbed Cantonese version). OH WHAT tawdry tales are weaved about the stuff of legends! Bruce Lee's life story has been reduced to the level of kung fu flick in Dragon, which spends more time recreating cliches than presenting an insightful look at the man. Shackled with corny dialogue and situations that would have been considered out-of-date before Lee was born, Dragon is hardly the interpretation of Lee's life many viewers would have sought. Still, the action scenes guarantee martial arts fans will not walk away wanting. Whatever Dragon's faults, its chief virtue is the casting of charismatic newcomer Jason Scott Lee in the lead. Overcoming some of Dragon's contrivances is another matter. The film opens with a ghostly nightmare where the ghosts are symbolic of the inner demons haunting Bruce Lee and his father, hackneyed symbols that present a ''pop psychology'' key to the young man's psyche. From this brief opening sequence, set in 1949, the film jumps a dozen years - ignoring Lee's early career as a child star in about a score of Cantonese films between 1946 and 1961.- portraying the future superstar as an anonymous 20-year-old brawling with four drunken British sailors at a local dance. This and subsequent fights are staged in the highly stylistic manner of a Lee movie.They may work on the level of martial arts but are unconvincing in what is an ostensibly realistic context. Lee escapes Hongkong but not cliches, clutching a poster of James Dean on his voyage to America. In San Francisco he fights more battles, including racial ones. When he and future wife Linda attend a screening of Breakfast at Tiffany's, Mickey Rooney's stereotypical Japanese has the audience in hysterics - except Lee, who is mortified by the caricature. The irony, and one hinted at in the film, is that Lee created a new kind of Asian stereotype, a stereotype that is perpetuated by films like Dragon. Perhaps the most fascinating aspect is Lee's death at 32, an event still shrouded in mystery. Dragon cops out on this, too, by having Linda comment that she is more interested in how he lived than how he died. Unfortunately, Dragon provides few insights into either.