[Firefoot]

It seems to me that the question at hand is not which is more evil, but which is more powerful. I would say that they are equally evil: both were mighty and committed servants of Morgoth and had virtually the same causes. But I am inclined to agree that Dragons are more powerful than Balrogs, for reasons already posted.

At that point in Tolkien's writing he hadn't written anything on Valar and Maiar.

Actually he had. There are several drafts of stories written concerning Valar and Maiar, which are recorded in HoME. It is true that in The Hobbit Gandalf is not portrayed as the strong Maiar in LotR and other writings, but I don't know that he was "just a wizard." I'm thinking Tolkien had at least some ideas of how the Wizards/Maiar thing would work out.

If Tolkien had written him as a maiar he could have easily killed a few wargs.

And in doing so he would disobey the his orders not to use his full powers, which he ended up doing in destroying the Balrog anyway. It would probably take quite a few Wargs to defeat a Balrog, especially considering they are afraid of fire.

Tolkien said that there were never more than 7 Balrogs and that they were maiar and alot stronger.

Can you give a quote for this? I have looked all over the Silmarillion for a reference for this and everywhere they are mentioned there seem to be quite a few of them. For example, at the War of Wrath, "The Balrogs were destroyed, save some few that fled and hid themselves in caversn inaccessible at the roots of the earth." This is also after Ecthelion and Glorfindel have killed their Balrogs, and I think it would also be safe to say that at least a few more were killed in the Nirnaeth Arnoediad, Dagor Bragollach, or the Fall of Gondolin. If there were only 7, at least two of them dead, there were only 5 at the War of Wrath, and only a few survived. That doesn't make sense with the wording "The Balrogs were destroyed, save some few." That sounds more like a great many Balrogs were slain, and maybe two or three survived, one of those being of course the Balrog of Moria.

Another reason I think Balrogs are stonger is because Tolkien wrote that the elves feared the Balrog of moria greater than anyone but he who sits in the Dark tower.

However, at this time there were also no great dragons left. Smaug had been killed some 80 years earlier. Smaug was the last great dragon, and compared to Ancalagon or Glaurung, Smaug wasn't even all that mighty.

In specific instances, killing a Balrog or Dragon is a pretty big thing, and was only accomplished by Túrin, Ecthelion, Glorfindel, Gandalf, Eärendil as a 'holy' being, and the Valar in the War of Wrath, and Ecthelion, Glorfindel, and Gandalf all died doing so. And Bard, but only because of Smaug's weak spot and a lucky chance.

But I would say that what makes the Dragons ultimately more powerful is their ability to speak and reason which Balrogs are not recorded as having. Also Dragons can put spells on people. This is probably why Glaurung was at the head of the Balrogs: a smart Dragon would make a much better commander than a Balrog. And the Dragons were quite smart and clever.