Could a Dwarf melee with a Balrog?

[BGreg]

That is possible. However, you're not mentioning the fact Legolas was also pretty scared when Balrog appeared, was he not?

'Ai! Ai!' wailed Legolas. 'A Balrog! A Balrog is come!'

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:

The dwarves it is said had seven, but nothing could make them invisible.

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?