[Boromir88]

I would argue that that statement is not supported by the text. Tolkien himself wrote in his Letter Nr. 131: "While he [Sauron] wore it [the One Ring], his power on earth was actually enhanced. But even if he did not wear it, that power [his original power that he poured into the ring, minus the "extra-power"] existed and was in 'rapport' with himself: he was not 'diminished'."~denethorthefirst

I think that Letter 131 quote is about Sauron's power to corrupt and dominate the minds and wills of others was enhanced, but the "power" Morthoron is talking about is Sauron's (and I have no better way to describe it) physical and spiritual power diminished.

Melkor descended into nihilism, since he didn't have the power of creation, he spent his power towards uncreation and destroying absolutely everything. Sauron never became a nihilist, nor was he an atheist. He never objected to Creation, nor stopped believing in the "Gods" only believed they neglected Middle-earth, and didn't care what the Valar or Eru did so long as they kept ignoring his primary motivations to bulldoze Free Will.

The quote from Letter 131 is about in creating the Ring Sauron's power to "dominate and control hearts and minds" was enhanced, and that power was not diminished even if he did not wear it:

Sauron became thus almost supreme in Middle-earth. The Elves held out in secret places (not yet revealed). The last Elf-Kingdom of Gil-galad is maintained precariously on the extreme west-shores, where are the havens of the Ships. Elrond the Half-elven, son of Earendil, maintains a kind of enchanted sanctuary at Imladris. On the extreme eastern margin of the western lands. But Sauron dominates all the multiplying hordes of Men that have had no contact with the Elves and so indirectly with the true and unfallen Valar and gods. He rules a growing empire from the great dark tower of Barad-dur in Mordor, near the Mountain of Fire, wielding the One Ring.

But to achieve this he had been obliged to let a great part of his inherent power (a frequent and very significant motive in myth and fairy-story) pass into the One Ring. While he wore it, his power on earth was actually enhanced. But even if he did not wear it, that power existed and was in 'rapport' with himself: he was not 'diminished.' Unless some other seized it and became possessed of it. If that happened, the new possessor could (if sufficiently strong and heroic by nature) challenge Sauron, become master of all that he had learned or done since the making of the One Ring, and so overthrow him and usurp his place. This was the essential weakness he had introduced into his situation in his effort (largely unsuccessful) to enslave the Elves, and in his desire to establish a control over the minds and wills of his servants.

This "power" that was enhanced, is referring to Sauron's empire-building in Middle-earth. His motivation was not to undo creation, but to corrupt and bend it to his will. By creating the ring, his power of corrupting and bulldozing free will was enhanced, but he had to put much of his inherent power into the Ring. Weakening his own physical/spiritual power, which is Morthoron's point in Sauron no longer having the power to appear in a fair form. And after he's killed by Gil-galad and Elendil, he's unable to rebuild his ring-finger. Gollum says "He has nine fingers, but they are enough." In another Letter Tolkien surmises Sauron could essentially be physically killed enough times to the point were he can't rebuild, and it took him much longer to rebuild a body after being killed during the Last Alliance:

After the battle with Gilgalad and Elendil, Sauron took a long while to re-build, longer than he had done after the Downfall of Numenor (I suppose because each building-up used up some of the inherent energy of the spirit, which might be called the 'will' or the effective link between the indestructible mind and being and the realization of its imagination).'~Letter 200

So, I would argue, the power the Ring "enhanced" was Sauron's attempt of empire-building in dominating "minds and wills" of others, but this did diminish his inherent power. What Tolkien refers to in Letter 200 has the "line between the indestructible mind and being and the realization if its imagination". The link between what one could call "will power" and "real (or maybe physical) power" weakened by Sauron's creation of the Ring.