AH-HA! One of my favorite hobby horses!
First of all I have a few questions. Do you mean that the Balrog would be bigger than the dragon is tall when the dragon is standing on all four feet, or do you mean that the Balrog is taller than a dragon is long?
Could you explain this comment a little bit more? I want to make sure that we are talking about the same thing. Do you mean that the Balrog shape-shifts or that size is different from Balrog to Balrog?
I read someplace (I'm sorry, I'm afraid that I have no idea where) that Smaug was over 80 feet long from snout to tail. I'm sure that's not canon, but I thought I'd say throw that out there just to give some idea of the lengths we may be talking about.