drac = devil
dracul = the devil
"Dracula" doesn't sound Romanian and as far as I know doesn't mean anything
dragon is in Romanian "dragon" or "zmeu"
the only close word [name] is "Draculea", a sort of regional folk nickname [rarely used] for someone who is "devilish"
The word "dracul" means "the Devil" in modern Romanian, I've been told, but in Vlad's day also meant "dragon" or "demon", and derives from the Latin word Draco, also meaning "dragon". So, it could be argued that his Romanian surname, Drǎculea, is derived from his father's title Dracul, meaning affiliation to and/or descent from "Dracul". It is said that all this issue with the dragon comes from the induction of Vlad II into the Order of the Dragon (Societas Draconis in Latin) as a reward to his loyalty to Sigismund of Luxemburg, Holy Roman Emperor and King of Hungary.
About Vlad's ways of ruler -through fear and terror. Well... we must bear in mind that Vlad is born in a family divided into two factions fighting for power -the Drăculeşti and the Dăneşti-. As in Wallachia the crown didn't pass automatically from father to son bit the leader was elected by the boyars, with the requirement that the Prince-elect be of nominally Basarab princely lineage (os de domn — "of voivode bones", "of voivode marrow"), this elective monarchy often resulted in instability, family disputes and assassinations.
Also, there was the struggle between the prince and the high nobility for control over the country. Add to this the two powerful neighbors of Wallachia, the Kingdom of Hungary and the Ottoman Empire, at the peak of their rivalry for control of southeastern Europe, which turns Wallachia into a battle ground. His father, Vlad II, was removed from power in 1442 because he didn't firmly compromize with Hungary in its wars against the Ottomans. So he changed sides and was reinstored to power by the Ottomans until his murder in 1447 at the hands of the boyars, by instigation of Johann Hunyadi. Vlad, by the way, is born when his familiy lives in exile in Transylvania. He and Radu are sent as hostages to the Ottoman empire as a way that the Sultan has to be sure that Vlad senior is going to fulfill his word of vassalizing Wallachia to the Sultan.
Then we have his problems with his brother Radu, who continuously tried to replace Vlad with the support of the Turks, to which he had very strong connections. He disliked his brother a lot, because of his connections with the Ottomans, who he hated for his experience during his captivity.
So, bearing in mind this volatile background, we cannot be surprised if his bid for power includes eliminating all possible threats to his power, mainly the rival nobility groups, i.e. the boyars, meaning physical elimination and by reducing the economic role of the nobility which is replaced by those who manifested loyalty towards Vlad. He also acted against the Saxon cities, allied to the boyards, but also independent and priviliged cities, a power by themselves which was a threat -or at least Vlad thought so- to the prince's authority. Thus he raided them, too. Add to this his attempts to get ride of his Dăneşti rivals and his attempt to remain independent and not getting caught between Hungary and the Ottoman Empire.
A lot of pressure, don't you think?
But all his efforts come to naught when the Ottomans finally attack Wallachia and put Radu in his place. Radu makes a deal with Matthias Corvinus who, sends Vlad to prison. He spends ten or so years in prison till his freed, as Hungary is not quite pleased with Radu's pro-Turkish policy. So he returns to the battlefield and to his demise. He recovers power but he's left alone by his allies. Nobody in Wallachia loves him -his harsh measures made any foreign ruler too look better than Vlad- so he's alone when the Turk returns and he's killed -in battle or murdered, whatever.
About whether Vlad was a psycopath or terror was the way to rule in that time, I'll explain it in the next post, as I think that this is too long by now.