Extremely important update: I conducted a vigorous detective search into whether this painting depicted a wizard turning a lizard into a unicorn or the other way around, unicorn into lizard, OR if it was just some strange unicorn-headed lizard beast. This was clearly the most important issue of the week. The painting was used as cover art for an Advanced Dungeon and Dragons 2.0 module called “Wizard’s Challenge”… which had nothing to do with this picture. No unicorns whatsoever. It seemed like I hit a dead-end but I actually managed to track down the artist, Erik Olson’s, email and decided why not ask. He was very nice and sent me a folder of images of his paintings from that time period, all of which are stupendous but here are a couple: 

And here is the answer!

It’s a poor innocent lizard being turned into a unicorn! Case closed.