We know that the Maiar sent to Middle-earth as Istari are not using their full Maiar power. Gandalf the Gray is more than a human power wise, but not nearly equal to his full real power.
Is it known (from canon) whether there is something explicitly restricting Olorin's power when he's Gandalf the Gray, or is he merely prohibited from using it but still has it at his disposal?
Question arose from this comment. Daniel was using Saruman having greater powers once he turned "bad" as his reasoning.
Tolkien makes a couple of explicit references to some "rules of engagement" (my term, not his):
it was a humbling and abnegation of himself in confirmity to 'the Rules'
And
He is still under the obligation of concealing his power and teaching rather than forcing or dominating wills
It is unclear whether these restrictions were "hardcoded", or merely the choice of the Istari to obey them. Given the Istari were given enough free will to get distracted (Radagast) or become corrupted (Saruman), I would extrapolate that these rules were not enforced. Rather they were instructed not to directly engage Sauron and his minions unless failure of their mission is the only other option, to conceal their power and to exploit the "soft" powers to allow the races of Middle Earth to defeat Sauron through their own means, not by direct conflict between Maiar.
In addition to those his "mortal" form also acted as part of these rules, albeit an unchangeable and hence "enforced" part. As Tolkien said,
they were embodied in physical bodies capable of pain, and weariness, and of afflicting the spirit with physical fear, and of being 'killed', though supported by the angelic spirit they might endure long, and only show slowly the wearing of care and labour.
Pain, weariness, fear and death were all hazards that the Istari would either not face at all without the restrictions of their physical forms, or would only face under much more limited circumstances. The concept of death definitely existed for them, as Gandalf really 'died', and was changed.
All quotes are from Letter 156.
The answer is neither; the Istari are perfectly capable of "uncloaking" and Gandalf does so (or threatens to do so) on a number of occasions in the books.
The Istari essay in Unfinished Tales sets out the scope of the "Rules" under which they operated:
their emissaries were forbidden to reveal themselves in forms of majesty, or to seek to rule the wills of Men and Elves by open display of power, but coming in shapes weak and humble were bidden to advise and persuade Men and Elves to good, and to seek to unite in love and understanding all those whom Sauron, should he come again, would endeavour to dominate and corrupt.
What's important to note here is that this is not a restriction on level or degree of power. There is precisely one limitation in which the Istari may not use power, and that is to "rule the wills of Men and Elves"; aside from that the Istari may use power to battle evil, accomplish magical feats, etc.
I used the word "uncloaked" above, and that was directly lifted from LotR, where Bilbo initially refuses to leave the Ring behind:
'It will be my turn to get angry soon. If you say that again, I shall. Then you will see Gandalf the Grey uncloaked.' He took a step towards the hobbit, and he seemed to grow tall and menacing; his shadow filled the little room.
Let's also look at Gandalf during his fight against the wolves before the Fellowship enter Moria:
In the wavering firelight Gandalf seemed suddenly to grow: he rose up, a great menacing shape like the monument of some ancient king of stone set upon a hill. Stooping like a cloud, he lifted a burning branch and strode to meet the wolves. They gave back before him. High in the air he tossed the blazing brand. It flared with a sudden white radiance like lightning; and his voice rolled like thunder.
And finally at Helm's Deep:
There suddenly upon a ridge appeared a rider, clad in white, shining in the rising sun ... The White Rider was upon them, and the terror of his coming filled the enemy with madness. The wild men fell on their faces before him.
The language used here is very important, so let's extract some key phrases from all 3:
Remembering that this is Gandalf we're talking about, let's now compare with another passage, describing something else:
What it was could not be seen: it was like a great shadow, in the middle of which was a dark form, of man-shape maybe, yet greater; and a power and terror seemed to be in it and to go before it.
It came to the edge of the fire and the light faded as if a cloud had bent over it.
At this point the conclusion should be unmistakable: Gandalf has exactly the same intimidating presence as the Balrog, is quite prepared to use it where necessary, and is clearly not under any restrictions - even as Gandalf the Grey - that prevent him from doing so.
This was a fairly long-winded way of deconstructing the notion that the Istari must always act in a low-key, subtle or behind-the-scenes manner. The limitations imposed on them, and their various degrees of power, aren't something that can be measured on a scale with only one axis. They can't confront Sauron directly, they can't seek to dominate the wills of Elves and Men, but they can and do "uncloak" and unleash immense power where circumstances otherwise require it.
The wikipedia article provides something of an answer, quoting a letter as a source:
http://en.wikipedia.org/wiki/Wizard_(Middle-earth)
They were "clothed" in the bodies of old Men, as the Valar wished them to guide the inhabitants of Middle-earth by persuasion and encouragement, not by force or fear. However, they aged very slowly and were in fact immortal. Physically they were "real" Men, and felt all the urges, pleasures and fears of flesh and blood. Therefore, in spite of their specific and unambiguous goal, the Wizards were capable of human feelings; Gandalf, for example, felt great affection for the Hobbits. They could also feel negative human emotions such as greed, jealousy, and lust for power. It is hinted in the essay in Unfinished Tales that the Blue Wizards may have fallen prey to these temptations, though information published in The Peoples of Middle-earth seems to contradict this version of their history. Although immortal, their physical bodies could be destroyed by violence—thus Gandalf truly died in the fight with the Balrog, beyond the power of the Valar to resurrect him; Eru Ilúvatar himself intervened to send Gandalf back.[1]
Similarly, Saruman was killed when his throat was cut by his own servant in The Return of the King. The Istari also carried staves, which seem to be tied to their ability to wield magic; when Saruman is defeated at Isengard, Gandalf in the same breath casts him from the White Council and breaks his staff (although he retains the persuasive power of his voice).
And the citation in question:
In Letters, #156, pp 202–3, Tolkien clearly implies that the 'Authority' who sent Gandalf back was above the Valar (who are bound by Arda's space and time, while Gandalf went beyond time). Tolkien clearly intends this as an example of Eru intervening to change the course of the world.
So they did not, in fact, have access to all powers of the Maiar. Maiar are truly immortal and cannot be killed (as I understand it).
And I may have been wrong about their staves being purely symbolic.
The Istari also carried staves, which seem to be tied to their ability to wield magic; when Saruman is defeated at Isengard, Gandalf in the same breath casts him from the White Council and breaks his staff (although he retains the persuasive power of his voice).
The true answer seems to be: "It is never explained."
Yes and yes. Gandalf does have limits to his power; he is is often referred to, even by himself, as the weakest of his order. But even considering this he is not alowed to unleash the full scope of his power, he is supposed to only rally and inspire the free people. It has been this way ever since the Valar almost destroyed the elves fighting Morgoth.
