he's well enough rounded with good hands to make most fights interesting,take into account the status of 170 in general, and having a fighter like Diaz back in it can't hurt at all.
Don't get me wrong. I like Diaz and he brings a lot of hype and excitement to fights. But, he sucks against good wrestlers. Most of the UFC top tier fighters have a solid wrestling base. To steal a line from Chael, "he would spend more time on his back than a porn-star with a mortgage".
That said, if they only matched him up with fighters like Thiago, it would make for some good fights. But he would not be able to make a real title run....