We analyze the hydrodynamic solutions for a dilute Bose-Einstein condensate with long-range dipolar interactions in a rotating, elliptical harmonic trap. The static solutions and their regimes of dynamical instability vary nontrivially with the strength of the dipolar interactions. We comprehensively map out this behavior, and, in particular, examine the experimental routes toward unstable dynamics, which, in analogy to conventional condensates, may lead to vortex lattice formation.