Legolas, that is one of my favorite letters.
"In his actual presence none but a very few of equal stature could have hoped withhold it from him. Of 'Mortals" no one, not even Aragorn." ... "Sauron should be thought of as very terrible." (246)
In his presence, any but a few of the Maia would have crumbled and given it over to him.
Also, Sauron's power was not diminished in the creation of the ring. Only if someone claimed and took complete control of the ring. Please see the link below:
http://oakroadsystems.com/genl/ringfaq.htm#1-Rapport
I have posted this link before, but i think it is relevent to this discussion.
Also, this link mirrors many opinions about beating Sauron militarily with the ring:
http://oakroadsystems.com/genl/ringfaq.htm#1-BeatSauron