England had opened a 15-3 lead courtesy of tries from Mark Cueto and Lewis Moody before Martyn Williams hauled Wales to within five points by the interval.
But Mike Tindall's score with 19 minutes to go was the killer blow and England then cut loose.
Dallaglio scored on his return to England duty after 17 months in retirement, Matt Dawson scampered over and Tom Voyce completed the rout.
Wales made an electric start and were almost ahead inside the opening minutes when Mark Jones broke clear down the right wing. But he ignored Hal Luscombe on the inside and was denied by Josh Lewsey's tackle.
England stormed into the lead after 13 minutes courtesy of an expert finish from Cueto, who burst onto a superb offload from Jamie Noon and outpaced Shane Williams in a 30-metre race to the line.
Lewsey went off with a shoulder injury and Stephen Jones got Wales on the board before the visitors served notice again of their attacking threat.
The fly-half linked with Shane Williams and it required some last-ditch defence from Ben Cohen to deny Wales the try.
England then opened their 15-3 gap with a penalty from Hodgson and a try from Moody, who was driven over from an England lineout.
But Wales posted an immediate response. Dwayne Peel exploited a giant gap at the rear of England's lineout and fed Martyn Williams for the try.
England opened the second-half with attacking menace and Noon almost put Danny Grewcock over before Hodgson landed his second penalty.
Stephen Jones responded in kind for Wales but England held the upper hand. Hodgson landed his third penalty before Tindall struck the killer blow with 19 minutes remaining.
Noon was involved again after a long cut-out pass from Hodgson, setting up Voyce who was halted just short of the line.
But the ball was recycled quickly and Hodgson's pass sent Tindall over for England's third try.
England then rang the changes, Dallaglio came on for Corry and celebrated his return to the Test arena with a try as he charged over the line.
Dawson, another of the late replacements, added to Wales' misery before Voyce rounded off the scoring with the final play of the game.