Toxic for some reason or another doesn't like certain fighters, therefore he also really criticises and under rates their fighting ability. Average striking at best, hmm no he is definitely above average. He is also an excellent grappler and his wrestling is far from just above average. Being mentally tough for all your fights doesn't get you as far as Diego has come, he has the skills to go with it.
Do i see him beating Penn? Nope, but he is definitely going to put up a better fight than Kenny Florian who like BJ said him self, "he just didn't want to fight" and ran away from Penn when ever he tried to engage, this wont be the case with Diego.