[Carannillion]

The reasons for the Valar not intervening themselves - or sending Maiar in power rather than in guise - are many, and quite a few have been covered here, but I think that perhaps the Valar didn't use power because it would have been to much; the thing about the people of ME having a free will, and doing it on their own. A baby growing up with parents who gives him challenges and advice, instead of wrapping him in thick blankets and keeping him totally isolated from the real world.
Suppose Ilúvatar also had a word in this: Sending fifteen Valar to defeat one Maia does seem a bit like shooting sparrows with ICBMs... Remember the wars between Melkor and the other Valar; 'throwing' mountains at each other and sinking continents might be just a little too much for small, 'naive' (in a positive way) hobbits and other folk not concerned with the affairs of the lords of ME.
The Valar had played their part in the good-evil battle of ME; the Undying Lands separated, Melkor expelled, stars, sun and moon created and so on. The greater race(s) had 'passed over the rim' (ok, this is Babylon 5, but it fits, somehow) and are waiting for the younger races to join them - and ultimately, of course, all will join with Ilúvatar together.