To do this, feed any Capsule Monster a Long Knife (purchasable at any store early on) Now, save the game. Use the soft reset (l+R+start+select) When you load, instead of requiring a rarer item for the next feeding, you'll only have to use another Long Knife. This is an apparent glitch tht resets the list of items needed to level up monsters. NOTE: You MUST use the Soft Reset option, not a regular reset)
To defeat the Egg Dragon in less than one round, you only need: A healing item/spell and enough hit points to survive his attack.
First, you just heal him and then attack him once and he will die.
This is because he has max possible hp and the programmers forgot a hp-cap to prevent this.
In Retry Mode you will receive four times as much exp and gold as the first time through. In Gift Mode, you can select your own party which is only really useful for the Ancient Dungeon.