There is a reasonably good body of information regarding atmospheric composition during the Mesozoic. Both carbon dioxide and oxygen concentrations were higher that at present, particularly during the Cretaceous, and the total atmospheric density would have been slightly greater as a result - but the difference would have been relatively mild for large vertebrates.
Here is an example of a paper published on the effects of Cretaceous oxygen concentrations on plants: http://jxb.oxfordjournals.org/content/52/357/801.full, and there is a manuscript examining the effect of paleoatmosphere conditions on insects: http://jeb.biologists.org/content/201/8/1043.full.pdf
As you can see, plants and insects probably felt the effects of slightly higher oxygen and carbon dioxide concentrations, and indeed the insects of the Cretaceous included some relatively large species, as would be expected. A slight increase in atmospheric density would have relatively little impact on the maximum size of dinosaurs or pterosaurs, however, and there is not actually any need for an extreme explanation for their size, anyway - despite being larger than living animals with similar lifestyles, none of the giant dinosaurs exceeded the expected maximum size for a walking animal, and no pterosaurs exceeded the limits for biological flight. Quite a few pterosaurs exceeded the estimated limit for continuous flapping flight in a vertebrate animal (limit is roughly 25-30 kg, give or take), but that only means that they could not flap continuously over long distances and would have switched to soaring flight for long trips; it does not forbid them from flying.