Nadindel
Ah... well it wouldn't take much to beat me in any duel. I've barely ever had a duel in-character, so I wouldn't recognize the difference between making my character relatively strong or power-playing, so that ends up with me toning it down 'just to make sure'.
As far as "power-playing" goes in battles, it really depends on how you play your hand. The idea is that you cannot have your character strike your opponent without permission. This leaves you with a few options:
1) Describe what your char does and then wait and see if the other person decides to take the hit or not. Note that under this practice it is discouraged or seen as "cheap" if you dodge everything and make your character seem like a god. See also; Aizen from Bleach.
2) Send a private message to the person and determine beforehand the rules you want to go by. You can decide which character will win and who will lose, or if it will be a stalemate, or if something else will interrupt part-way through. You can request that your character wins/loses and give your reasons for why this should happen ("my character is a few years older and is thus more experienced" or "something important will happen if my character wins"), or you can flip a coin or roll dice or play rock-paper-scissors to determine who will win. It's best if you could get a third part to witness the the coin/dice toss so that there's a witness. Ideally, though, you don't want people observing the fight to know what will happen until you write it out, that way there is still suspense!
3) Integrate ideas from both methods. Decide what works for you and agree upon something with the other party.
4) Decide by logic based upon the characters' fighting experience, personalities, and health factors. As mentioned before, if one character is a magic teacher and the other is a cocky student trying to upstart the teacher, I would expect the experienced professional to win. Of course, that isn't always the case, so it's generally best to talk it out amongst yourselves.
5) You can also agree amonst yourselves if you can say what the other person's character does. If you say what the person does WITHOUT PERMISSION in ANY SETTING then this is power-playing/godmodding. But with permission it is absolutely fine, of course. You should probably say [in brackets] that the person is fine with you controlling his/her character.
Here is an example of a roleplay battle between my character (Sethieron) and the lovely Winny-chan's (Elon). We discussed beforehand how we wanted the battle to go in general and then added description as we went. We even role played for each other's character. The fight starts a few posts down.
http://animatriangle.proboards.com/index.cgi?board=westisles&action=display&thread=30&page=1 [This role play is based upon the Fire Emblem video game series and is a scene that I am rather proud of. Epic archer duels ftw!]
I hope that clears things up somewhat, Nadindel. If you've any more questions about role play battling, be sure to ask.