Re: it developed from there.
No, it didn't. From there it simply spiraled out of control.
There are two ways to deal with that budgetary problem:
1. Develop the story around it. What is causing the gravity to increase? How is that happening? The key bit here is the thing that is creating mass out of nothing or the thing that is transferring mass to the moon. Cybermen or Daleks could easily handle that with some technobabble about advanced gravitic machinery and a plot to destroy Earth. This particular Space Dragon and it's Deus Ex Machina ending? Not so much.
2. Review the old Tom Baker tapes and follow their lead. More specifically, ignore the fact that you ought to employ special effects for gravity on the moon.
Oddly enough if they had opted for 2 and stuck with a Space Dragon being spawned on the Moon, the rest of it might have worked. Although you'd need a new reason for the moral dilemma.