If the item is too awesome to be used, then the difficulty of the game is too low.

Alternatively, the player might be insecure about using the item because he doesn't precisely know the benefit of doing so.

How to prevent the "Too awesome to use" syndrome
At least twice in LoTR:FotR, ringwraiths cower away from bodies of water. The second time (the ford of Bruinen) can be explained away by their fear of some Elvish magical trap through the enchantment of the water; but what about the first time, at the ferry? One of the Nazgul could have easily made the jump onto the barge and quickly dispatched those pesky Hobitsses.
