Small LW? 166lbs?
He stated himself in an interview that he was walking around at that weight during his first move. It was a long time ago so I'd struggle to find the source. I'll say he wasn't a small lightweight, but I wouldn't he was huge either.
That picture doesn't convince me that much. He looks cut, but a lot of fighters do at weigh ins. Also take in the fact during his stare downs, he flexes everything in his entire body in an attempt to look scary. During his fights and on his way down to the octagon, looking at him straight ahead, he looks significantly scrawnier than most of the other "big lightweights". He just looked stick-ish in my opinion (agree to disagree I suppose) while not really showing off any of that "strength" during his fights. He has been hyped as a decent wrestler (His take downs are ehh, but overall, his ground game is great) while Guida could (and will) make 145 and Guida still managed to take him down and hold him there. I scored that fight for Diego of course, but it was disappointing to see him being held down like that, even if he were the one doing all of the damage despite being on his back.
That being said, I'd love to see Nate Diaz vs. Diego Sanchez. That fight would be complete fireworks. On the ground and standing. I'd say Diaz has the advantage standing, but Diego has that never say die attitude and pace which works well for him. He can be the inferior striker, but remain competitive on the feet. (You know.. Unless he's fighting a 155 BJ Penn.) On the ground is where I'd really want to see it. I'd say Diego has better wrestling, while Diaz may have slightly better BJJ due to having better submissions, but grappling/scrambling wise, it's a toss up in my opinion. This fight would have to happen. Diego Sanchez vs. Nick Diaz was a fun fight to watch, so I wouldn't expect anything less from this.