Gandalf Uncloaked?

[Attalus]

In light of our discussion of the Istari, I remembered and reread the chapter "The Shadow of the Past." In it, Bilbo calls Gandalf a thief and the wizard lets his temper slip a bit, and says, "If you call me that again, I shall, and then you will see Gandalf the Grey uncloaked," then follows the bit about him growing to seem to fill the little room, scaring the bejabbers out of Bilbo. What, do you suppose, did he mean by that? Did he have the power to show his Maiar form to mortals, at that point, or was he just blustering. He sounded awfully serious.