Absolutely he's capable of learning and becoming better. I don't think that's in doubt.
Someone (in theory) might have been able to squeeze a bit more ability out of Ricky Hatton, but would he ever have been able to beat Floyd Mayweather?
You still end up with the same issue in the end... given two sportsmen, both of whom are capable of improving, do you choose Hatton or Mayweather in your team?
I think Delph could improve under Pep, but he'll never be Iniesta and if we could buy a new Iniesta, Delph would be gone right? - it's the same with Joe, or any player for that matter.
If we have a player in the academy that Pep thinks can make it to the very top, then I'm sure he'd invest time and effort in that young lad, but he is not going to do that with a player he doesn't think can make it to the very top - even if he could still make him a bit better.