Dragons vs. Balrogs?

[Kuruharan]

I'm curious to know if you would put the Dragons above Sauron or even Melkor (in his reduced state) simply because the Dragons are much larger and physically impressive Kuruharan?

Certainly not above Morgoth. He was a Vala and of a higher order of creation than the Maiar. He was also their master, and they were at least to a degree under his thrall.
Sauron, well Sauron is probably of a different type than the spirits of Balrogs and Dragons. I don't mean that he was a different type of Maia, I mean that his personality, skills, and powers were different. He was a controller, administrator, and leader. And note that everytime that he went into combat himself, he lost. He was beaten by Huan, he was personally defeated by Gil-Galad and Elendil, fighting just does not seem to be his thing.

Even if the spirit that inhabits a Dragon is a Maia it did not construct its own Hroa (body) and has become completely trapped on the physical plain. On the other hand Balrogs created their own Hroa and seem to be able to manipulate their form, at least to some extent.

Where does it say that Balrogs constructed their own hroa?
Just because Gandalf said that the Balrog had become "a thing of slime, stronger than a strangling snake" does not mean that the Balrog had assumed the form of a snake. It was a metaphor. I think the ability for them to increase the relative fire or darkness was just another useful function that their hroa could perform depending on the need. It would be a nice trick.

Because of this there is no way that a stray arrow would have been able to kill a Balrog.

Again, I must say, you don't know this.

The reason Glorfindel's helmut spike was able to kill Gothmog was because Gothmog was defeated on a spiritual level first.

Well, it was Ecthelion's helmet spike, but I still rather doubt that they had a great deal of time for spiritual victories or defeats with a big battle swirling about them. If you mean that the individual in question had to overcome the terror of a Balrog before fighting it, that would also hold true for a dragon. Especially if you were silly enough to look into a Dragon's eyes (*cough* Turin *cough*).