Perhaps, depending on what they wished to accomplish, Maiar might be forced to fall into the natural laws of Ea?
Such as, if the Istari wished to have the magical abilities they had to apply to the nature of Ea (and perhaps on a cosmic sort of level, they had to stick their 'souls' so to speak into the cosmic web of Ea and the fate of Middle-earth in particular in order to help the land and its peoples), and so had to take on bodies that were in line with the physics and natural order of things.
Or, their more 'ultimate' power was something the Maiar gave up in order to show the depth of their commitment to Middle-earth, and once it was given up, it could not be gotten back without first completing their mission.
Maybe for Radagast, any 'shape-shifting' he did was still simply bound by the laws of nature, and so he could only don the visage of anything natural in Middle-earth. And even then I expect he was limited in this power (his 'old age' meant he could not exert himself too much would be the simplest of limits). I think Raynor's point that his way with 'illusion' was applied to the world around him rather than to himself is interesting, though.
Is it 'illusion,' though, that Radagast was the master of, or actually some form of 'shape-shifting?' Even if he could change his own appearance, was it simply an illusion, or did he actually take on the form of, say, an animal?
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