In the M&T it says that dragons of age category 3 or less only do half damage. However I am uncertain if this applies to breath weapon attacks as well.

No. Half damage is dealt for raw physical attacks, like claw, claw, wing buffet (and all you can bite), or tail slaps. BW attacks deal X damage per Age... period. In general, this is often XdY (x2) per age but there are exceptions and other qualifications.