Sounds okay, but a few recommendations (some constructive criticism if ya don't mind
For the sang priest, I'd go with the axe, since he'll be joining one of your assault squads and won't have to take challenges.
I wouldn't swap squads out.. You can't take the extra melta gun or flamer if you do so. Just add 5 more guys!
Do you intend to walk you dreadnaught all the way up into close combat? He'll be shot to pieces before he makes it. You'll need a drop pod for him, if you want him to have a fighting chance, and even then it's a large risk that he won't make it into close combat. I'm no expert with dreadnaughts (i personally think they're much too slow and unreliable), but generally people use the furioso instead of the DC version, as it has 13 front armor instead of 12 (and the frag cannon isn't bad either).
Also, the DC's squad doesn't need so many upgrades. For 5 men, 1 power fist should be just fine. i know it's cool having so much super gear, but they're pretty much going to trash anything they can make it to (survivability being key). If you're going to spend that many points, double the squad size. 10 DC with 1 or 2 Power Fists is WAY better than a fully geared out squad of 5, because they get like 6 attacks each on the charge with WS5 and S5. Or, spend the gear on Jump Packs, so they can jump with and hide behind your assault squads and live longer.
If I was your opponent, I would think "hmmm, I'm gonna fire everything I got at that rhino and leave those DC walking across the board." With 11 armor, it won't be hard for me to pop it, kill your DC who don't survive thaaat well on their own, and then only have a dreadnaught to worry about. Plus, troops cant assault the same turn they leave a rhino, so even if the rhino made it across the board, I would unload on them before you could get them into CC. Personally, I love DC with Jump Packs. They're just really freaking expensive point wise, so you'll need a good distraction (i.e.: drop podding a dreadnaught in close proximity to the enemy) while they advance upward, because most players fire everything they got at the DC.
In higher point games, putting a walking DC squad in a land raider or Stormraven works well, because they have more survivability (i.e. faster/ better armor) than a rhino, and CAN assault the same turn when disembarking from these vehicles.
Anyway, I'll stop with the criticism. Your 500 pt roster looks very good. However, I think a lot of new players struggle to balance their pt budget when moving outside of the basic HQ, 2 Troops prerequisite. There's a TON to choose from, and it's really easy to feel the need to put some superdeath, awesome, fully geared up elite unit together. While this can be alright, just think how the rest of your list supports this unit, since it will be the pivot point of your army.
Finally, make sure to experiment and do your own thing if it feels right. Nothing feels better then making a creative list that functions in a tactical way that is unique to you. Just make sure you think through the various angles.