This is not a Gandalf vs Smaug debate.
The question is more about whether, if presented with the opportunity, Gandalf would have been permitted (by the Valar) to fight Smaug without any limitations to his power?
I know that as a wizard, he is instructed to only be a guiding spirit and not unleash his full power. However, in Moria, he fights the Balrog using his abilities as a wizard in full.
Probably.
The prohibition on the Istari:
"Their emissaries [the Istari/Wizards] were forbidden to reveal themselves in forms of majesty, or to seek to rule the wills of Men or Elves by open displays of power"
Unfinished Tales, The Istari
"But they were forbidden to match his [Sauron's] power with power, or to seek to dominate Elves or Men by force or fear".
LOTR, Appendix B
Fighting Smaug wouldn't constitute trying to rule or overawe Elves or Men, nor trying to defeat Sauron directly, so it would probably be OK.
Gandalf fought the Balrog because no other could have; it would have been devastating for the Fellowship to potentially be defeated so early in its journey.
Smaug doesn't represent the same kind of threat. He was potentially dangerous if he had been recruited into Sauron's army, but otherwise he was mostly just hanging out counting his coins and eating a few gemstones. He spread some terror toward the locals, but he wasn't proving himself to be a menace to all the realm. I think it's also strongly implied that Smaug was a punishment to the dwarves for their greed and avarice, and Gandalf acting as chief dragon slayer would go against his role as (moral) guide. Certainly Gandalf has shown more interest in the mortal world than many others of his power, but it is in line with his character to interfere as little as possible. He would prefer to create and encourage heroism among mortals than fight all the baddies himself.
