The six months the ex-Fulham boss had in charge saw the side struggle for results and performances with many criticising the Englishman's tactics.
Dalglish replaced him in early January and the turnaround on the field was marked, with the team enjoying the kind of form which would have put them on a par with Chelsea and Manchester City had it been reproduced over a full season.
Real Madrid full-back Arbeloa watched from afar as a club he still holds in great esteem struggled at times and agreed with the consensus that Hodgson was just not the right fit for the Reds.
"I think they played maybe too many long balls under Hodgson," said Arbeloa.
"I think Liverpool are the type of team that has to play more football.
"Technically they have some really good players and they need to play more football.
"I think with Dalglish, who was one of the best players in the history of Liverpool, they look more confident and they improved a lot."
Many attributed Liverpool's problems to a gradual decline since they ran Manchester United a close second in 2009, which appeared to be prompted by the departure of Xabi Alonso to Real.
However, Arbeloa's Madrid team-mate, whom he also played alongside at Liverpool, believes that was too simplistic an explanation and was disrespectful to the players who remained.
In the absence of the experience duo of Alonso and Javier Mascherano, who left for Barcelona last summer, Brazil midfielder Lucas Leiva enjoyed his best season in a Reds shirt.
But Alonso stressed it would be wrong for his former club to be looking for a player with an identical match to his own talents.
"I think that Lucas for example, has improved quite a lot the last few years, he has won a lot of importance in the team and has become quite mature," the Spain international told sportsillustrated.com.
"But [let's not] think about a new Alonso. Try to think of a new pattern, a new pattern of play, a new idea of how to play and that comes from Kenny, as well as (assistant manager) Steve Clarke who's done a great job.
"That's going to be important to create a style, and that's what they're going to try to work on.
"And now, when they sign new players, try to gel them as well as possible."