The list of people that Tolkien explicitly believes might have been able to defeat Sauron in a direct confrontation, using the Ring against him, is essentially limited to Gandalf.
One can imagine the scene in which Gandalf, say, was placed in such a position [of direct confrontation]. It would be a delicate balance. On one side the true allegiance of the Ring to Sauron; on the other superior strength because Sauron was not actually in possession, and perhaps also because he was weakened by long corruption and expenditure of will in dominating inferiors. If Gandalf proved the victor, the result would have been for Sauron the same as the destruction of the Ring; for him it would have been destroyed, taken from him for ever. But the Ring and all its works would have endured. It would have been the master in the end. (Letter 246)
Others, such as Elrond and Galadriel, could have wielded the Ring, but they would have not have used it to dominate Sauron in a direct confrontation: they would have used it to dominate lesser wills and to form massive, absolutely subservient armies to crush him with.
In any case Elrond or Galadriel would have proceeded in the policy now adopted by Sauron: they would have built up an empire with great and absolutely subservient generals and armies and engines of war, until they could challenge Sauron and destroy him by force. Confrontation of Sauron alone, unaided, self to self was not contemplated. (Letter 246)
Sauron evidently believed that Aragorn also fell into this category - this was the whole gambit in the Lord of the Rings, to convince Sauron that Aragorn had, and was wielding, the Ring, and that the use of the Ring had made him arrogant enough to strike out before he was really militarily ready.
We must push Sauron to his last throw. We must call out his hidden strength, so that he shall empty his land. We must march out to meet him at once. We must make ourselves the bait, though his jaws should close on us. He will take that bait, in hope and in greed, for he will think that in such rashness he sees the pride of the new Ringlord: and he will say: "So! he pushes out his neck too soon and too far. Let him come on, and behold I will have him in a trap from which he cannot escape. There I will crush him, and what he has taken in his insolence shall be mine again for ever."
(Lord of the Rings)
It's also not clear that Frodo would not have eventually been able to use the Ring. Tolkien plays with the idea of hypothetically what Frodo would have done if Gollum wasn't at Mount Doom.
He had grown since then. Would they [the Nazgul] have been immune from its power if [Frodo] claimed [the Ring] as an instrument of command and domination? Not wholly. I do not think they could have attacked him with violence, nor laid hold upon him or taken him captive; they would have obeyed or feigned to obey any minor commands of his that did not interfere with their errand – laid upon them by Sauron, who still through their nine rings (which he held) had primary control of their wills. That errand was to remove Frodo from the Crack. Once he lost the power or opportunity to destroy the Ring, the end could not be in doubt – saving help from outside, which was hardly even remotely possible. Frodo had become a considerable person, but of a special kind: in spiritual enlargement rather than in increase of physical or mental power; his will was much stronger than it had been, but so far it had been exercised in resisting not using the Ring and with the object of destroying it. He needed time, much time, before he could control the Ring or (which in such a case is the same) before it could control him; before his will and arrogance could grow to a stature in which he could dominate other major hostile wills. (Letters)
This seems to suggest that eventually, Frodo could have used the Ring to dominate other major hostile wills. Certainly one can't imagine him confronting Sauron, of course, but presumably this contains the kernel of an idea of Frodo leading armies, perhaps as a kind of Joan of Arc figure.
I think speculatively, we can assume that other willful characters, particularly those in positions of power (already having a right to rule and being used to command seems to make the use and job of the Ring as an 'instrument of command and domination' easier), would have been similarly able: Denethor, for example, seems to already have the requisite type of will. Saruman achieved a similar effect to the Ring with his Voice, so perhaps he'd be well-suited to the Ring himself.
