I allow "Type M" (mental attack spells) to be used on anybody except animals, vermin, constructs, and monsters with an IQ under 5.
Obviously, in the case of mentally attacking a dragon, please remember that the Great Drakes have access to the "Dispelling Ways" spell list. Also, Dragons have a long memory and are likely to come looking for the person who charmed them. Likewise with Liches.
Most trolls and ogres have an IQ of 10 to 50 (according to C & T). This makes them just smart enough to mentally dominate.
If you don't allow mental attacks on monsters, then the "Spirit Mastery" list and the entire Mentalist profession would be relegated to heavy roleplaying campaigns. (Not that there's anything wrong with that
)