I agree and Madara and Pein working together has nothing to do with strength I would think that by now you guys would understand that because someone it taking orders from someone else doesn't mean that either one is stronger than the other.
@ CapsuleCorpJX: All Itachi said was that the Madara of present is a failure and can't compare to his previous self, you can't take anything from that other than Madara is weaker now than he was before.
Secondly I don't think Jiraiya is stronger than Madara and there is absolutely no way you can prove that. Madara losing to the first means nothing at the moment because you can take nothing from that other than he lost and we don't know the circumstances and as Oro said no matter how strong you are you can't take on an organized force like a village by yourself.
Even though Itachi said that the present Madara is weak, its safe to assume that he is still stronger than Itachi is which is why Itachi said the he as yet only has the potential to surpass Madara. He didn't say that he surpassed him or that he was in any way near to surpassing him, he said that if he had Sasuke's eyes he would then have the potential to.
Also strength means nothing, once you achieve or surpass the level of the Sannin like most of the major characters have anyone can beat anyone that should be pretty obvious and the reasons should be rather simple to understand. Once you get to that level strength does not matter, every one at that point is incredibly strong and no one would easily be able to over power another. At that point the main tactic in a battle is exploiting your opponents weaknesses, so whoever could do that the best would win a battle.
The battle with Pein and Jiraiya is a perfect example of this, although Pein was made out to be far superior than Jiraiya and Jiraiya himself acknowledged this. At the end of the battle Jiraiya figured out Pein's secret and Pein himself said if Jiraiya were able to exploit it he would then have been able to defeat him.