I guess you missed this:Completely forgot about this topic, but may I direct your attention to HoME - Morgoth's Ring
I've continued this discussion here.Meantime I would like to seek everyone's cooperation in starting separate topics regarding tolkienish debates (not least so I can participate in them, lol, but I can't in this topic since I'd prefer to keep the topic on track.)
Edit @Zyraen: Balrogs should be tough. It took practically a god (Istari or super high-level elf lord) to bring them down .
Yes Balrogs should be tough, but balanced with a game design in mind. And they of course should be Rare.