I agree that 16 .. Bc6 does look rather ugly. However it is Dearing's recommendation - probably because 16 .. Be6 17 g4 is (as he shows at some length) exceedingly dangerous for black.
(16 .. Bc6 17 g4 e5! is apparently the point.).

I'm not sure if black can move something other than his light squared bishop at this point - neither Dearing or Golubev (in the easy guide book) mention the possibility - maybe g4 is just too strong a threat.

I'm afraid I can't offer any specific advice (nothing obvious springs to mind) but I do find this interesting because I looked at something like this for white - but with 17 Qe2 b5 18 e5 Nd5 19 ed Qxd6 20 Ne4!? instead of Nxd5. That seemed to be a pretty stable (rare in the dragon!) strategically interesting position where black had to be pretty careful of his rather odd c4 rook. This Rhe1 stuff looks quite similar - white is nicely centralised.  I imagine black has to be OK somehow but I doubt there's a simple solution.

I guess the line has been slightly ignored because there aren't many sacrifices and black is happy to not be in any danger of losing by force for a change

What happened in your game can be compared to the note Dearing gives to 17 Qe2 b5 18 e5 de?! 19 Bxe5 etc which is almost what you got but with Rfe8 & Rfe1 thrown in at least meaning you at least had Rxh4 to try.