At 126, I could potentially see Saddler winning an inside battle by imposing his strength and experience (at that weight) on Arguello. However, getting past Arguello's powerpunches is a daunting task for any FW, and Saddler tended to move in on opponents with complete disdain for their power - something I think he'd come to regret in this case. End result is that I see a more probable path to victory for Arguello in this matchup than Saddler.
At 126, while he was very formidable, I don't think that Arguello had become Arguello yet, if that makes sense. In my mind he improved a lot at 130. This fight could very well come down to how Arguello reacts when Saddler gets in close and gets rough, which is what he did in every fight of his that I have seen. If Arguello is strong enough not to get manhandled in close and keeps his composure his chances of winning are much better.
I think the only person likely to be KOed in this one is Arguello. Both were huge punchers - Arguello slightly bigger of the two IMO - but his chin wasn't as good. I can't see Olivares hurting Saddler like he did Arguello. I don't know what happened in the Torres fight, but I don't think he'd drop Saddler either. For me, Saddler's smothering and parrying could mess with Arguello up close. I don't think Arguello's skill level was even close to what it became at FW. I suppose his power and explosiveness could deter Saddler but one of the most impressive attributes IMO about Saddler is that he seemed to act independently in the ring; giving no regard for any other man in there, whether it be it an opponent or a referee. Arguello would absolutely get off first. He's quicker and throws shorter shots. Arguello throws more, so he should out-work and out-land Saddler at mid and long range, so I can see him winning a decision if he can hold his own up close with Saddler, and not get stopped. I think it's likely that Arguello wins a close decision in a brutal fight. Saddler could win though.
I slightly side Saddler at 126, and confidently side Arguello at 130. I dont think any junior lightweight in history beats Arguello outside of Floyd.