Considering half the stuff Itachi said in part 1 was part of his "worlds greatest actor" bit, I'd take whatever he says in part 1 and really think about if it's true or he's using that as a excuse to not use his full power. This was before Uchiha's were ultimate power in the Naruto universe. And frankly I can't think of a single thing Jiraiya could do in his Sage Mode that could rival MS Itachi in Susanoo. I do believe Itachi when he said they'd both die. As in Itachi would kill Jiraiya in the end and the stress of using his MS would kill him. Again, this is not me saying Jiraiya is weak. I consider him very powerful. But the Uchihas, Bijuu users, Hashirama cell users, and Uzumaki bloodlines are beyond normal mortals. Orochimaru knew this, hence why he wanted Sharingan to remain relevant since part 1.
As far as Orochimaru and Jiraiya go, I have always considered Jiraiya the more impressive of the two attack wise. Orochimaru is powerful, one of the most powerful characters in part 1, but he never did anything that made me say "Holy crap! This guys a legendary beast!" Pretty much all his most dangerous attacks involve him summoning someone or something else to fight for him. That's not cheap or anything, but compared to Jiraiya, being able to pull off all these cool moves alone, like with his hair. I don't know. Orochimaru's not weak. Neither is Jiraiya. They just suffer what most part 1 characters suffered.
Edit: By the way, Edo Tensei Nagato vs Madara? Madara wins. Madara has Rinnegan as well, so he can do everything Nagato can do. But Nagato doesn't have Sharingan, so Madara can troll any fight, so long as Kaguya doesn't eat him midway through the fight.