Through out the Harry Potter series, Voldemort always seems to have this very mysterious quality about him that makes him terrifying. No one ever knows how power he is. Is he alive, is he dead? Is he even human? This is especially relevant in "Harry Potter and the Deathly Hallows" because Voldemort becomes so powerful, but no one knows exactly how powerful because he works through various people rather then just going out and just shouting "hey world, I'm back, I'm in charge of the ministry of magic and if you aren't pure blood you are going to die." Obviously I'm kidding, but really, if he wanted to he could tell everyone he was in charge and no one could do anything about it because he has the ministry under his control.
Instead of openly killing all the muggles and muggle-borns, the ministry passes laws putting anyone who is muggle born through a trial which will most likely have them end up in Askaban. There is no real proof that Voldemort is behind this, though as the reader it seems safe to assume. That however is the problem, you are assuming, not certain. In life, when something is not certain the imagination is left to wander and wonder. Much more powerful then solid facts even if the facts work against you. Solid facts you can hold on to and figure things out with. Uncertainty is no help. The wizards aren't sure who is on Voldemort's side and who they can trust so no one can help them. Then, there is whispered gossip about Voldemort. I think that gossip is just uncertainty in a more real form. A form that can be passed on and changed causing misinformation. Like when you are little and play "telephone." You start with one word but end with another. I think Voldemort knows this and won't go out and say what the word is but passes it around knowing that it will change and become more deadly.