Could he make it back to the majors?
Absolutely. Villarreal was signed by the Orioles as a minor-league free agent in the 2011-2012 offseason, presumably as a long-shot major league flyer who could serve in the AAA bullpen if he didn’t make the majors. Villarreal was one of the two Tides who spent the entire year at Norfolk, and pitched middle/setup relief the entire season. He had a few outings when he struggled with his control, but was usually an effective groundball pitcher (he allowed 1 home run in 68 innings.)
Villarreal has pitched effectively in the majors before. In 2003, at age 21, he had a 2.57 ERA in 98 innings as the Diamondbacks’ set-up relief pitcher; his arm was apparently unable to handle the workload and he spent 2004 and 2005 recovering. Traded to Atlanta, he was effective in 169 innings over two seasons; he was then traded to Houston and was ineffective in 2008. The Astros tried to send him to the minors; he opted to become a free agent and started bouncing around the minor leagues; not pitching at all in 2009 and spending most of 2011 in the Mexican League.
The San Diego Padres, among others, have developed a reputation for taking forgotten pitchers and turning them into an effective bullpen — Mike Adams being the most notable example. If he were in the right situation, Villarreal would seem to be an ideal candidate to be another Mike Adams.