The Third Hokage (aka the Professor), Hiruzen Sarutobi was one of the most confusing figures in the Naruto World. He was not around long enough to see his skill level (except 1 fight), or his personal views on most things. He also had a hand in one of the most twisted (and confusing) parts in Konoha history, the Uchiha massacre. So lets breakdown this legendary Shinobi to better understand who he really was.
Starting with his skill level, Hiruzen was considered the strongest of all the Kage during his time, and one of the immense powers of Shinobi history. He was nicknamed "the Professor" due to his ability to learn an incredible variety of jutsu. He was so knowledgeable in the shinobi arts that he was able to predict others' moves simply by looking at the hand signals opponents used (yes he was that good).
Hiruzen was an earth and fire user. His main weapon of choice was the staff which was actually a transformed version of his summoned creature, the Monkey King, Enma. The staff was able to change sizes at will which allowed Hiruzen to attack from various distances. His power, even at old age, was enough to fight off the reincarnated version of the 1st Hokage and the 2nd Hokage AND Orochimaru. He was not only strong enough to fight them in an intense battle, he was also able to defeat the former 2, and defeat Orochimaru (not to mention take Orochimaru's ability to use his arms permanently (although he got them back later)).
Hiruzen was a controversial figure because of the very trait that made him such a beloved Hokage: his compassion. He was often unwilling to do what he deemed "necessary" for the village. Examples of this were his decisions to let Orochimaru live after he found him experimenting on people or to let Danzo deal with the "necessary" things that needed to be done for the village. It was his indecision and "compassion" that some blame as partly responsible for forcing Itachi to kill the entire Uchiha clan. Rather than take a stand against such things, Hiruzen often decided to let them pass as much as he could.
To me, Hiruzen was a great man, but I am not sure if he was a great leader. A great leader, or Hokage, in this case, needed to be able to not only make the good clean decision, but also the tough decisions. As Hokage, Hiruzen should have been able to deal with something like the Uchiha massacre decision rather than leave it to the likes Danzo.