[Earendilyon]

Osse, you typed 'Sauron', where you probably meant 'Saruman'.

As to your post: I don't think the Valar could have set the thing with the Balrog in motion. And I don't think Eru did, for He intervened as little as possible on that scale in Middle Earth (in the Númenor intervention, the Valar asked Eru to do that; I don't think they asked Eru to push Harry a bit).
Part of Letter 156 was already posted, but I think it's valuable to post the whole part of the Letter concerning Gandalf's death and return. It makes clear he indeed got more power, and that he was sent back by Eru Himself (called the Authority by JRRT).
I hope you'll enjoy this rather long quote:

I think the way in which Gandalf's return is presented is a defect, and one other critic, as much under the spell as yourself, curiously used the same expression: 'cheating'. That is partly due to the ever-present compulsions of narrative technique. He must return at that point, and such explanations of his survival as are explicitly set out must be given there – but the narrative is urgent, and must not be held up for elaborate discussions involving the whole 'mythological' setting. It is a little impeded even so, though I have severely cut G's account of himself. I might perhaps have made more clear the later remarks in Vol. II (and Vol. III) which refer to or are made by Gandalf, but I have purposely kept all allusions to the highest matters down to mere hints, perceptible only by the most attentive, or kept them under unexplained symbolic forms. So God and the 'angelic' gods, the Lords or Powers of the West, only peep through in such places as Gandalf's conversation with Frodo: 'behind that there was something else at work, beyond any design of the Ring-maker's' ; or in Faramir's Númenórean grace at dinner.
Gandalf really 'died', and was changed: for that seems to me the only real cheating, to represent anything that can be called 'death' as making no difference. 'I am G. the White, who has returned from death'. Probably he should rather have said to Wormtongue: 'I have not passed through death (not 'fire and flood') to bandy crooked words with a serving-man'. And so on. I might say much more, but it would only be in (perhaps tedious) elucidation of the 'mythological' ideas in my mind; it would not, I fear, get rid of the fact that the return of G. is as presented in this book a 'defect', and one I was aware of, and probably did not work hard enough to mend. But G. is not, of course, a human being (Man or Hobbit). There are naturally no precise modern terms to say what he was. I wd. venture to say that he was an incarnate 'angel'– strictly an ἄγγελος:2 that is, with the other Istari, wizards, 'those who know', an emissary from the Lords of the West, sent to Middle-earth, as the great crisis of Sauron loomed on the horizon. By 'incarnate' I mean they were embodied in physical bodies capable of pain, and weariness, and of afflicting the spirit with physical fear, and of being 'killed', though supported by the angelic spirit they might endure long, and only show slowly the wearing of care and labour.
Why they should take such a form is bound up with the 'mythology' of the 'angelic' Powers of the world of this fable. At this point in the fabulous history the purpose was precisely to limit and hinder their exhibition of 'power' on the physical plane, and so that they should do what they were primarily sent for: train, advise, instruct, arouse the hearts and minds of those threatened by Sauron to a resistance with their own strengths; and not just to do the job for them. They thus appeared as 'old' sage figures. But in this 'mythology' all the 'angelic' powers concerned with this world were capable of many degrees of error and failing between the absolute Satanic rebellion and evil of Morgoth and his satellite Sauron, and the fainéance of some of the other higher powers or 'gods'. The 'wizards' were not exempt, indeed being incarnate were more likely to stray, or err. Gandalf alone fully passes the tests, on a moral plane anyway (he makes mistakes of judgement). For in his condition it was for him a sacrifice to perish on the Bridge in defence of his companions, less perhaps than for a mortal Man or Hobbit, since he had a far greater inner power than they; but also more, since it was a humbling and abnegation of himself in conformity to 'the Rules': for all he could know at that moment he was the only person who could direct the resistance to Sauron successfully, and all his mission was vain. He was handing over to the Authority that ordained the Rules, and giving up personal hope of success.
That I should say is what the Authority wished, as a set-off to Saruman. The 'wizards', as such, had failed; or if you like: the crisis had become too grave and needed an enhancement of power. So Gandalf sacrificed himself, was accepted, and enhanced, and returned. 'Yes, that was the name. I was Gandalf.' Of course he remains similar in personality and idiosyncrasy, but both his wisdom and power are much greater. When he speaks he commands attention; the old Gandalf could not have dealt so with Théoden, nor with Saruman. He is still under the obligation of concealing his power and of teaching rather than forcing or dominating wills, but where the physical powers of the Enemy are too great for the good will of the opposers to be effective he can act in emergency as an 'angel' – no more violently than the release of St Peter from prison. He seldom does so, operating rather through others, but in one or two cases in the War (in Vol. III) he does reveal a sudden power: he twice rescues Faramir. He alone is left to forbid the entrance of the Lord of Nazgûl to Minas Tirith, when the City has been overthrown and its Gates destroyed — and yet so powerful is the whole train of human resistance, that he himself has kindled and organized, that in fact no battle between the two occurs: it passes to other mortal hands. In the end before he departs for ever he sums himself up: 'I was the enemy of Sauron'. He might have added: 'for that purpose I was sent to Middle-earth'. But by that he would at the end have meant more than at the beginning. He was sent by a mere prudent plan of the angelic Valar or governors; but Authority had taken up this plan and enlarged it, at the moment of its failure. 'Naked I was sent back – for a brief time, until my task is done'. Sent back by whom, and whence? Not by the 'gods' whose business is only with this embodied world and its time; for he passed 'out of thought and time'. Naked is alas! unclear. It was meant just literally, 'unclothed like a child' (not discarnate), and so ready to receive the white robes of the highest. Galadriel's power is not divine, and his healing in Lórien is meant to be no more than physical healing and refreshment.
But if it is 'cheating' to treat 'death' as making no difference, embodiment must not be ignored. Gandalf may be enhanced in power (that is, under the forms of this fable, in sanctity), but if still embodied he must still suffer care and anxiety, and the needs of flesh. He has no more (if no less) certitudes, or freedoms, than say a living theologian. In any case none of my 'angelic' persons are represented as knowing the future completely, or indeed at all where other wills are concerned. Hence their constant temptation to do, or try to do, what is for them wrong (and disastrous): to force lesser wills by power: by awe if not by actual fear, or physical constraint. But the nature of the gods' knowledge of the history of the World, and their part in making it (before it was embodied or made 'real') – whence they drew their knowledge of the future, such as they had, is pan of the major mythology. It is at least there represented that the intrusion of Elves and Men into that story was not any pan of theirs at all, but reserved: hence Elves and Men were called the Children of God; and hence the gods either loved (or hated) them specially: as having a relation to the Creator equal to their own, if of different stature. This is the mythological-theological situation at this moment in History, which has been made explicit but has not yet been published.