Kisame's only about the level of Zabuza/Kakashi. I say that because he's one of the strongest of the Mist, just like Zabuza was before he became a missing-nin.

It could be possible that Itachi and Kisame were referring to the Kyuubi when they said they'd be defeated and at best die along with him. Unless someone retranslates it, we'll never know what they truly meant.