[Ainaserkewen]

I think, if I read right, that the istari have been granted leave of using powers of mind and hand. So they can fight with their magic and have power over other's minds(Sarumon) Of course the Valar have these powers too, but they probably couldn't use them to help middle-earth, that's what the istari were for. If the Valar could use all their powers whenever they wanted, to do whatever, there would be many dark lords competing all at once. Iluvatar probably made sure that this didn't happen, especially after Melkor! As for the elves, I be the Valar gave to them the secrets of magic, so they could use it for good.