The issue of early villains' power scaling when compared to later antagonists is a recurring one in a lot of shonen anime. Crocodile is in One Piece, the Gotei 13 are in Bleach, and Orochimaru, one of the Legendary Sannin, is in Naruto. When Orochimaru first appeared in the early episodes of Naruto, his strength was incredibly intimidating. He battled head-to-head with the Third Hokage Hiruzen Sarutobi, the God of Shinobi, and played tricks on Sasuke Uchiha and Kakashi Hatake.
Hiruzen's Sealing Technique had reduced Orochimaru's strength, but he was still considered a credible threat, and his feats up to that point were supposed to demonstrate just how dangerous he was. Then, in part one, Itachi Uchiha and Kisame Hoshigaki were introduced, followed by the entire town-destroying-level powered Akatsuki in Shippuden. The problem of Orochimaru's perceived strength was exacerbated when the jutsu of later antagonists, combined with their destructive powers and innate abilities, appeared to make everything in Part One look like children pretending to be ninjas. Nonetheless, this perception does not do Orochimaru's role in the story justice.
The Problem With Power Creep
Power scaling has always been a major issue within long-running anime series. The inclusion of Haki in One Piece has always been a point of contention, as it made some characters who seemed strong before and who should have known how to use it look tragically weak as the story progressed. In Bleach, there was a different issue -- the powers of the characters jumped around at such inconsistent levels that it was impossible to keep track of whether Ichigo Kurosaki was much more powerful than the captains or was on par with them, depending on what was going on in the story at the time.
Naruto seemed to suffer from a different problem in its power creeping. As the story got bigger, so did the jutsu. Ninjas also got faster, and Orochimaru's performance in part one simply could not compete with the likes of Kakuzu, Kisame, Pain and Itachi, the latter of whom was even shown in the story to have easily defeated the Sannin when they were both in the Akatsuki. The Reanimation Jutsu, which seemed so incredibly powerful in part one, was put to shame by Kabuto's version, and even Orochimaru's fight against Naruto in Kyubi form made Orochimaru appear to be only just surviving rather than competing on an even footing.
Orochimaru Was Far More Powerful Than He Was Shown
Orochimaru was weaker than Itachi and Pain, but he was far from helpless. As a member of the Legendary Sannin, he was supposed to be on par with Jiraiya, whom Itachi and Kisame feared confronting, and he challenged Pain and Tsunade, who performed the best of all the Kage in the battle against Madara Uchiha. Orochimaru's reappearance later in the series attempted to imply that his power had become more consistent with the rest of the series' heavy-hitters, but the memory of how he was portrayed in Part One lingered in the minds of viewers, forever tainting his potential.
Orochimaru would have been a far more threatening foe in the eyes of the fans if he had been introduced in Shippuden or had not actually engaged in combat until the characters' powers had dramatically increased. In part one, he was still an enjoyable villain, raising the stakes of the conflicts and appearing to be on a completely different level of power. It's just a shame that in part two, the high level seemed comparable to a Chunin.
