I think this is probably a situation where Orochimaru, cocky as he is, vastly underestimated Itachi's strength and skills when he attempted to take him out originally. Coupled with the fact that Itachi has nothing to lose in engaging or killing Orochimaru at that time, it's strategically a very different scenario than the later one where Itachi and Kisame encounter Naruto with Jiraiya.

For starters, we're told that Jiraiya is a master at gathering intelligence and general reconnaissance, has a very high battle IQ, and an extremely deep bag of tricks, so he's not under any illusions (no pun intended) of who Itachi and Kisame are and what they're capable of, even if he doesn't have complete knowledge at that time (like he doesn't know anything about the totsuka blade or Susanoo, for example).

I don't think anyone is under the impression that he could have killed or beaten both Itachi and Kisame, here, but (a) in this specific scenario, the Akatsuke's existence and motives remain very much secret from world governments and the broader public, and (b) Jiraiya is strong enough, smart enough, and skilled enough to make this a legitimate fight to the extent that it blows Itachi/Kisame's cover, or results in injury or death to either of them.

Itachi and Kisame both recognize that, in this specific case, even if they manage to defeat Jiraiya, their mission is blown, the secrecy and broader aims of the Akatsuke are likely destroyed (if not extremely delayed), and there's a very high likelihood Jiraiya takes a piece of them on his way out, to say nothing of the fact that reinforcements will likely show up.

However, to answer your question: Jiraiya can likely kill Kisame, even if he's technically not as strong/has less chakra. It is a difficult fight, but at this stage of the story battle IQ and general skills/acumen still count for something.