No it doesn't assume any such thing. It assumes that God is rational, nothing else.That assumes that God has to abide by some standard outside Himself. If He defines right and wrong, then He could indeed declare devils to be saints.
Can you tell me why that isn’t possible?
And yes, it is not possible for God to declare devils to be saints. It would be a contradiction. He could no more do that then He could declare cubes to be spheres. He could turn a cube into a sphere but that isn't the same thing and He wouldn't even be able to get that far in regards to devils and saints because the definition of those terms is moral in nature and thus one is only able to makes one's self into a devil or a saint. That is, while one may have been created holy, one only becomes a devil by choosing to rebel against that creation and the One Who did the creating. One could speculate about a hypothetical god who created devils but that again would be a different issue altogether.
The bottom line is that words mean things and contradictions cannot exist in reality. God is real and is therefore incapable of making something it's opposite because to do it would be not to do it. Those previous called devils would still hurt people and saints would still benefit others. All that would happen is that the words being used would lose their meaning. It is an openly self-contradictory absurdity.