User blog comment:B214/Question and Answers/@comment-5882552-20130127060703/@comment-5185939-20130127065904

It's in the form of his human body because that's how Great Red built it.

As for whether or not Issei can shapeshift, it's possible, but we don't know for certain yet either way. I wouldn't be surprised if at the very least he could take the form of a dragon, but we just don't know yet.