First of all, it's of course correct that this scene is only present in the movies, so we don't really know what would have happenend. What we however practically know for sure, is that an Istari can't just leave his mortal form and become a full Ainur once more, just 'cause he pleases to do so. There are too many cases where this might have been extremely convenient -apart from that, even a weak Ainur can be killed by physical beings, see Balrogs -those are definitely not concealed like an Istari (quite the contrary to be precise). At least Saruman would probably directly abandon his mortal form the moment he decided to swap to the Dark Side (of the Force -sorry, I couldn't resist
), the fact he didn't, tells us, this is not just a voluntary restriction of their powers, but a permanent change, at least before a possible return to Aman.
Also, DieWalküre, please don't take this the wrong way, but I think you overestimate certain characters.
I'd like to remind everyone that an Istari is very much vulnerable -Saruman obviously was stabbed (movie) / cut through the throat (books), however even Gandalf was at least hurt once: After the BotFA, Bilbo encounters a Gandalf whose one arm is bandaged. And since they were only orcs present (and most likely not the big uruks of Mordor, but more of the small snaga orcs), an Istari can be harmed very much. (Apart from that, Gandalf was described to not participating directly in the fighting for the most time.)
I probably should have provided quotes to back my claim of the Witchkings power (at least I'm pretty sure that I had read about it), but unfortunately I don't have my sources with me right now... ^^
You are mistaken, my dear Adamin, since I'm still here.
Apart from the obvious displays of magical powers (breaking Frodo's sword at the Fords of Bruinen, enhancing Grond / weakening the gate), his terrific presence when acting as the revealed Dark Marshall (or whatever his title is in english) which makes it practically impossible for weak (and even many mediocre strong) minded to face him, Denethor remarks that the Witchking is finally someone equal to the White Rider. Gandalf does not deny this statement, also after Gandalf scared away the Nazgûl attacking Faramir it is written, that the Dark Marshall hadn't arrived yet to oppose this new foe. So while I agree BTW that the battle is won a little to easily by the Witchking in the movie (still better, then undead-drowned Galadriel in an over the top videogame-mind-battle against Sauron...), the two are certainly equal.
To sum up my thoughts about the scene and its possible outcome: I think there is no real denying that an Istari can be destroyed. I'm not sure, if this destroys his spirit or just the old man, meaning he could potentially still continue his existence in the undying lands (or given yet another chance, since after a potential fall of Gandalf the White, the good people of Middle Earth would be without a leader, which might be a reason for him returning in the first place, since the order of the Istari was basically done for after Gandalf died versus the Balrog and Saruman... well, I'm stating the obvious for him^^).
Greetings
Melkor Bauglir
Edit: Concerning this paragraph
So they both appeared very competent in that situation. Gandalf is a mighty wizard and Maiar of course, but the Witchking is described as drawing power out of the terror and fear around him. And during the siege of Minas Tirith the whole city was full of terror.
I have to object to some points: First and most importantly, Gandalf is of course technically a Maiar, but (even as Gandalf the White) still restricted. Yes, some of his powers are revealed once in a while, but it's still nothing like a full Maia with the ability to shapeshift. Therefore I would everytimes speak only of Istari if it comes to these wizards and basically use this "power-category" as a third, next to Valar and Maiar, which is further authorized by the huge emphasis in the LotR.
Secondly, I'd like to see a quote for this "feeding on fear"-process, since I believe it to be basically the other way around: Not the Witchking is getting stronger, the more fear there is, but the more direct Mordor's first in command is using his powers (not so much his magic, but his general presence) the more fear he calls forth. It is of course very important, how when he is acting: During the gate-scene when the two met, he is basically at the top of his power, all of Mordor's troops standing under his command with the clouds taking away any light -I think, the Nazgûl's fear-presence is basically amplified to closer they are to the grip of Mordor, which sounds awefully poetic, but a) this is the way the books are written, so deal with it, and b) if you consider, that Mordor (in the form of its full military power) is basically holding a terrified Minas Tirith in its grip, it gets a lot less poetic.