I've heard that argument before, long before I even knew about the Hype. How Gandalf is "only a fourth level mage" and such loads. Here's my primary counter argument, which works especially here on the Hype, what with it being a primarily superhero based site and all.
Among comic book fans, a common debate is the Batman vs. Superman debate. There are many good arguments for both sides, and honestly, there is no real clear cut winner in most cases. But it's hard to find a fan who'll say that Batman has no chance at all against Superman, and those who usually do focus more on the power levels of the two and less on the characters themselves. This is a common mistake, and one that seems be made here.
Gandalf's wisdom, like Batman's intelligence and resourcefulness, is as key to the battle as his skill in magic, which despite common belief is at quite a high level. Sure, I'll be the first to admit that I know next to squat about Dumbledore, though I don't doubt his power. My argument here is that Gandalf is not the push over many may think he is.
With but a simple light spell he disabled the ranks of a ten thousands strong army of orcs, he fought the Balrog to the death, killing the demon before he himself died. As noted above, Gandalf is also a holder of one of the rings of power, a gift bestowed upon a few individuals of great power. Then of course there's the fact that on Middle-Earth, wizards are an entirely different race than humanity, and Gandalf is something of a celestial being, akin to an archangel or the like.
My main point here is this; don't doubt power because it's expressed subtly.
