Actually the whole thing is not quite as confusing as it first seems. I remember reading this stuff for years and come up with all sorts of "what ifs" trying to figure it out. Is Leviathan a "sea serpent?" A whale? The devil? Or dinosaurs? Or something else entirely? Maybe dragons really did exist at one time and now they don't? Or maybe they are all hibernating waiting to awake once again like in the movie Reign of Fire.
(cool movie BTW) More recently some ultra literalist (yet very liberal) theologians have tried to identify these creatures with hippos or elephants or crocodiles. (as if the ancients were so stupid they couldn't tell the difference between a crocodile and a giant many headed beast rising up out of the sea to destroy the world
It's all very confusing, that is until you start to dig into the religion of the ancient Israelites as it actually was and begin to read all the other religious texts of the surrounding cultures at the time these books of the Bible were written. All the ancient near eastern religions had these exact same "monsters", often described in similar fashions with 7 or 9 heads, huge legs, terrible teeth, beasts rising up out of the sea etc. They are known as "chaos gods" or beings or entities. These are essentially just Hebrew versions of these same chaos monsters or gods. Tiamat the multi headed beast who brought chaos into the world was slayed by the god Marduk the son of the Babylonian creator god. Leviathan and Behemoth are just Hebrew names/versions for these types of gods. They are so darn similar in their descriptions that once you become familiar with all these various versions of the the same stories, there similarities just can't be ignore.
Even the Psalms talk about how YHWH (not Marduk) slayed Leviathan;
You divided the sea by Your strength; You broke the heads of the sea monsters in the waters. You crushed the heads of Leviathan; You gave him as food for the creatures of the wilderness. You broke open springs and torrents; You dried up ever-flowing streams.
Psalm 74:13-15, NASB
The book of Job chapter 41 has God asking Job, can you tame leviathan? Can you crush him? Can you subdue him? etc. The Old Testament is full of these texts. There is just no way, in their historical context, that these things can be talking about dinosaurs. The ancients had a very specific idea of what it was they were talking about. Did they take these stories literally? Who knows? I certainly don't. However I tend to think that in our age we tend to over literalize so many things that it is likely we're reading these texts as though they were scientific texts and not as scriptures. Maybe some of the authors DID take them literally. But perhaps other did not.
I think the point is, in particular with passages like in Pslam 74 that YHWH is the one who is in control of the world and NOT Marduk or any other gods. It is YHWH who reigns, who is able to subdue the chaos deities. I think a lot of these things are intentional jabs or digs against Polytheism. "oh, you think you're god is great, well let me to you something, it's not Baal or Marduk who is number one, but in fact it is YHWH who not only subdues Leviathan/Tiamat/chaos, but in fact it was YHWH who CREATED Tiamat! Take that
you pagans!" (tongue in cheek of course) Even Job says that God created leviathan, unlike the babylonian myths.
indentifying these chaos beasts with chaos or disorder itself, or the failure of human government seems to be what the later Apocalyptic literature picked up on in great detail. When Revelation mentions that there is a great best rising up out of the sea, in refers back to to Tiamat aka Leviathan. The Greek word for Tiamat is almost the exact same word for "sea". see: http://en.wikipedia.org/wiki/Tiamat
So when John is describing a seven headed beast (Tiamat was a seven headed dragon) rising up out of the sea, he is identifying the sea itself with chaos. (as many of the ancients did). The word for Tiamat is Thalatte, the greek word for sea is thalassa; almost the same word. So it's imagery that the readers of John (and books like 1 Enoch) would have been very familiar with. In a sense "the sea is rising up out of the sea". That's why John, in Revelation 21:1 writes:Then I saw a new heaven and a new earth; for the first heaven and the first earth passed away, and there is no longer any sea.
, in other words in the reconstituted earth there will be no more "chaos". It's shouldn't be taken to literally mean Jesus hates the sea and will stomp it out, but He will overcome chaos, or disorder, disunity, etc. John doesn't mean that literally there will be no water, but no more chaos. YHWH will over come chaos or evil itself. (perhaps a metaphor for death since death brings about chaos in our lives)
This seems to be how most scholars today understand this imagery. And I think it is imagery. Not to be taken literally because if we take it literally it makes no sense. I think God spoke through the writers of the Bible in language and mythology that people at the time would have understood. They understood that confusion in the world was personified by these sea monsters, and the Hebrews understood that God was somehow in control of it all even if it doesn't make sense. I suppose one can find dinosaurs or hippos in this but personally I find this imagery of life, death, chaos and YHWH slaying and/or taming the beast far more interesting. But I'm a Tolkien geek too and like the Silmarillion better than LOTR, so it's just my cup of tea I guess. However this is where Tolkien got so much material for the Silmarillion from Old Testament scholarship.