Seeing that the Edain team have struggle implementing Durin's Bane among the game mechanic they've been building, why not, instead of discarding the idea, change its mechanic to fit the game?
We all know that in TFOTR movie the Balrog is described different as it is in the book, looking maybe more overpower as it would actually be. Perhaps they can rebuild the base concept of Durin's Bane to adapt the role balrogs have in Morgoth's army during the first age: terrible and fearful captains who commanded the orc armies.
Its appearance and abilities would change in its basic form. For the concept model, I suggest to be guided by the description of the book and other texts: a 3-meter-tall humanoid creature (similar to the size of a troll), surrounded by shadows and flames that doesn't allow a clear vision of its body (and without wings, for now…). At first, it's possible to confuse it with the Necromancer, but it'll have a more clearer form, and its famous weapons: a sword and a whip, both appeared to be made of lava. I attach an image of how it could be:
For its powers, here are some vague ideas (they're not in order of level):
-A passive that make it resistant to weapon attacks but vulnerable to magic / other heroes abilities ("sword are no more use here" said Gandalf).
-Inspiring terror that make enemies flee, or an armor / leadership debuff.
-An area buff for goblin allies that increases their attack but losing some of their armor.
-A buff that enhance its damage to units and / or heroes. Like the old "Ignite" ability.
-A toggle that made its attacks to have aoe damage but losing attack speed (like the Witch-king).
-A special strike that deal great damage to heroes, or a debuff for them.
-A small / medium aoe fire damage to units (not useful against structures). A lesser version of "Breathe Fire".
As I said, this will be its base form, the one that can be recruited in the MM citadel for 3000 resources. Now if it picked the Ring, its form and abilities will change. As a non-restricted Maiar, it can change its appearance to resemble the demonic beast that is seemed in the movie (gaining its wings that allowed the Flight abilitie), and its abilities increase drastically, but with the condition that now affects allied units as well. For example, the Breathe Fire (now with huge radius) will damage its own army and structures, the terror inspired make allied and enemy units (not including heroes) to be paralyzed for some seconds, its aoe attack damage will also affect near allied units, etc. So it'll be a powerful unit that can destroy your army as well.
This of course are some ideas, I don't actually know nothing about balance or how to implement them well ingame. But for me, Durin's Bane could be an interesting ringhero for this faction, being Smaug a 10 points spell for the right (aggressive / short-term) tree of the spellbook.ree of the spellbook.
Hope you consider my idea, or modify them as you like