[Inziladun]

Originally Posted by Nogrod

So how come the loss of the Witch King didn't affect Sauron more than it did - or did it? I mean whatever the connection was, there surely was one - and thus losing it would have an effect (think about the talk of the elven Rings losing power).

I don't see the destruction of the WK as something Sauron would have felt personally.
The Nazgûl were connected to Sauron, true, but the reverse was not the case. Gandalf said of the Ringwraiths:

'The power of their master is in them, and they stand or fall by him.'

FOTR The Ring Goes South

Sauron's power held the Nazgûl to the earth and held sway over their wills, so his fall would be theirs. But he would not have been diminished by their passing. How could he be? He was losing nothing but servants, when it came down to it.

Originally Posted by Nogrod

Sure one can entertain the idea that after the death of the Witch King the battle at the Pelennor Fields was over (like it was in a sense) and that Sauron could muster the heavy forces to go against the "goodies" only as it was at the gates of Mordor, near enough for him to personally rally his troops...

While the loss of his most powerful field commander would have been a heavy blow from a military standpoint, I don't think that in itself had any crippling effect on Sauron or his army. It was demoralising for the rank-and-file-troops, no doubt, but I think the totem of Sauron in the minds of his slaves was enough to overcome that. Certainly you would have seen no cowardice or questioning of orders in Sauron's armies on the battlefield, though the odd Orc or two might voice some displeasure. And Sauron had the sheer numbers to overwhelm the West.
Gandalf did not think Sauron incapable of taking the offensive again after the battle of the Pelannor.

'Hardly has our strength sufficed to beat off the first great assault. The next will be greater.'

ROTK The Last Debate

Gandalf saw no loss in Sauron's war-making ability due to the WK being done in. As Gandalf put it, he would have been capable either of besieging and capturing Minas Tirith, or destroying militarily any army attacking him in Mordor. The point of Gandalf advising the assault on Mordor was not that they would have an easier time of it now that the WK was dead, but that Sauron would hopefully assume Aragorn had the Ring and turn all his attention his way.