Itachi's strengths are his mastery of his sharingan beyond that of any other Uchiha (other then Madara). He has knowledge of the three gods, Susanoo, Tsukuyomi, and Amatersu and his other prowess as a shinobi (taijutsu, ninjutsu, and genjutsu) makes him perhaps one of the strongest shinobi in the entire series...his weaknesses are his naturally low level of chakra, the risk of using his most powerful jutsu, which in a fight with Nagato is a neccessity. Using the standard MS, Itachi faces the risk of blindness very soon after activating his MS due to the amount of effort he'll need to fight against Nagato, once he goes blind he looses like 90% of his fighting capibilities, his sight gives him his kekkei genkai based ninjutsu and genjutsu and also his processing. Sight is one's primary natural sense and it hinders them to loose it since his abilities lay within his dojutsu (sight based techniques).
For Nagato, his strengths are his rinningan which allows him to use the five natures and YinYang release (although never shown), his 6 paths (Deva, Asura, Naraka, Pretta, Animal, and Human), and also the seventh path which is the Outer Path that controls life and death. With his six paths he can manipulate gravity, summon multiple animals, use projectiles, extract souls, summon the Outer path, and absorb chakra. He also has the Chibaku Tensai, which is the moon creation jutsu. Now for his weaknesses. despite his natural large reserves of chakra, the usage of his Rinningan causes and intense strain that is similar to how Itachi would feel from using Susanoo or using his MS for an extended time.
Now in a battle between these clear masters of the shinobi arts Nagato would be the clear winner. Nagato has the advantage of 6 on 1 with the inssurance of the real Nagato who doesn't have to fight. As for the MS abilities of Itachi, genjutsu could work on the six paths as seen with the battle against Jiraiya so Tsukuyomi could work, Amatersu may or may not work. I mean that Itachi could burn the bodies yes but until the bodies are completly chared and burnt to ash they could still fight as the paths do not feel pain for the simple fact that they're puppets and they're already dead. Also despite being eternal the flames still require chakra which can be absorbed by the Pretta path. Susanoo is at disadvantage and I say that because the uses of the Animal, Pretta, and the Deva path. Animal path barrages Susanoo with multiple attacking animals (canines, birds, centipeeds at least) however that's not the main problem. The abilities seen by Susanoo are the use of the three treasures and possibly the techniques Sasuke's used before all chakra based. However Yata mirror could provide a powerful defense and the Sword of "I forgot the name" could seal the paths in genjutsu. Deva path has the ability to use gravitational push which I believe could damage Susanoo seeing as Godaime Mizukage's Vapor release could melt the bones. Also The Chibaku Tensai I belive could seal Susanoo as it did an Eight Tailed Naruto (However only for as long as Nagato could hold the jutsu). Also in the event that any of the paths are destroyed the Naraka and Outer Path have the ability to revive sed paths. Now by this time both Itachi and Nagato have used up great deals of chakra, however the last factor is sight. Nagato's sight remains intact and Itachi is struck blind. Any Ninjutsu Itachi were to use is useless, blind he can't see his target and therefore his genjutsu which, as seen have all been sharingan based genjutsu would be usless as well as his MS abilities.
I also have a question since this is dealing with Itachi. I just noticed (or maybe I neglected to notice before and I may be wrong) but Itachi seemed at full health before he granted Naruto with his powers, and then we realized he was sick when he was fighting against Sasuke which was after Naruto gained Itachi's powers. Is it possible Itachi's illness came from giving Naruto the gift we're all so anxious to see or was he sick for a while and I just didn't notice? Enlighten me somebody.