Allardyce gave the controversial Senegalese striker a good chance at Ewood Park and before that with Bolton before he was sacked which ultimately led Diouf to depart Lancashire.
And after three impressive appearances with 'Gers, Allardyce says the loan deal at Ibrox will do Diouf the world of good.
"His ability, when he gets settled, will allow him to play at any level.
"Of course he has been playing in the Premier League, albeit in a wide position in a three rather than up front.
"Once he comes to terms and gets to know the players he's playing with and their strengths and weaknesses he'll get better and better.
"He actually started his career as a lone striker over in France.
"It was the position he was used in when he was with Senegal at the World Cup in 2002 when they reached the quarter-finals.
"That was the reason Liverpool paid so much for him. His capabilities of playing up there are very good. He obviously likes to drop off in the hole and make the play, keep the flow of attacking moves going.
"He's capable of taking the physical contact that comes with playing in that position.
"He enjoys the intensity of the larger crowd and Rangers are supported fantastically well. The bigger the atmosphere, then the better he plays. He just loves playing football."