That is possible. However, you're not mentioning the fact Legolas was also pretty scared when Balrog appeared, was he not?
Quote:
'Ai! Ai!' wailed Legolas. 'A Balrog! A Balrog is come!'
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And I don't think the Men behaved much different then Gimli did. Yes, they have seen the shadows (or maybe just perceived them), but were no less frightened.
Now, about this:
Quote:
The dwarves it is said had seven, but nothing could make them invisible.
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So the rings had no power over them. Isn't Tom Bombadil described in the same manner in the Elrond's Council? That makes me wonder. What would happen if a dwarf had found The Ring? Would he become invisible? Apparently not, if the quote above is to be trusted. How then did the dwarves not see a person wearing The Ring, like Bilbo? Would they not have the same power Tom Bombadil had?