I'm honestly conflicted with this. I'm not sure which outcome I would like better, him being dead or alive. Even if he was alive, at that point I don't know which I would like better, being a pirate or a revolutionary.
If he's dead than it makes sense that Ace was so over-protective of Luffy. Sabo's dying wish (though he wasn't aware he was about to die) was for Ace to look after Luffy and make sure he's okay. Being that they were so close, and Sabo and Ace's history as friends dates back even further than he and Luffy's, means that due to this and their brotherhood that he was going to fulfill Sabo's task until the day he died. He was always looking for reasons to live, and protecting Luffy became one from that day forth. However, whether or not Sabo died would probably have not changed the fact that he was going to look after Luffy no matter what. That's just how Ace is, he is true to his word. I do love tragic endings and it would be truly tragic for him to have died to a Tenryubito before they got a chance to meet again at Sea, given all the events before this.
Sabo being alive would be of one or two options. If he were a pirate that would be good and true to Sabo's intentions. He wanted to be free and sail around the world and hopefully meet up with his brothers some day. However, it wouldn't seem to make much sense really. If he were a pirate, being how Ace can get around the grand line like it was nothing and is part of one of the biggest pirate fleets in the world, he would have had to run into Sabo at one point or another or at least hear about him. As much as I would love to see that he is a great Pirate in the New World, it's just so unlikely that no one would have heard about him.
Sabo as a revolutionary I would like not quite as much but it would make much more sense had he survived. He would want to put an end to the way things are in the Goa Kingdom and with the Tenryubito, due to personal experience. The Revolutionaries aren't very covert being that they are well known throughout the Government and nearly toppled all of South Blue. Though their presence is known well, their ranks aren't well established. It is one of the most mysterious forces of the series thus far. In fact, with the pacing of the story as it is now, it would make sense that Sabo would come back especially as a Revolutionary. A while ago Dragon said that the "true nature of the world will be answered when he meets Luffy again", and I would say that time is at hand with the world entering "The New Age". Not to mention, with Ace dying and now mentioning Sabo for the first time in the series, this flashback shortly after these events, as well as including Dragon, Iva, and Kuma and the beginnings of the Revolutionary Army, all signs are pointing to a reunion. I have a feeling if Oda didn't mean for the story to progress in this manner, he wouldn't have spent most of the time recently in this particular flashback.
As for his strength, as I see that being a key point in the character as well. If he were alive, the fact that he matched Ace when they were kids and was able to easily defeat Luffy even with his devil fruit powers meant that he was quite a capable combatant. Even before him joining the Whitebeard pirates, he was offered a spot as a Shichibukai due to his strength. When fighting Blackbeard, one of his crew mates commented on how powerful Ace was as a fighter even without the Mera Mera No Mi. So if they were both evenly matched as children, it was obvious how they were both to end up.
