My god the name Jyggalag gave me a huge sensation of nostalgia.
But Jyggalag was the daedric prince of Order.. Cadwell doesn't seem to me like someone in.. order. Also, Jyggalag was a pretty bad dude - Cadwell is too helpful. Interesting thought, though

Cadwell isn't Jyggalag, Cadwell is Cadwell. Jyggalag is still Sheogorath in this time period.
It's an interesting theory I guess, but it really isn't backed up by anything and the information in Oblivion basically contradicts it. If Cadwell was a remnant of Jyggalag the Hero of Kvatch would not have succeeded in the Shivering Isles DLC.Cadwell isn't Jyggalag, Cadwell is Cadwell. Jyggalag is still Sheogorath in this time period.
A remnant of the original Jyggalag. Sheogorath was created from Jyggalag by other Daedric princes. They ganged up on him and changed him. Maybe they all pitched in 10% of their power, ripped Jyggalag into 2 pieces and made the piece with all the powers Sheogorath using their own power. The husk became Cadwell and Molag Bal kept him.
In Oblivion, Sheogorath somewhat restores Jyggalag by duping himself, creating a new Sheogorath from the Hero of Kvatch.
Cadwell says cryptic things, knows a lot about Oblivion, Meridia is nice to him, he claims to be a knight and Jyggalag has the form of an armored knight.
Maybe that's a story for a future game. Jyggalag isn't whole and Cadwell is in some realm he can't access.
I'm sorry, but there is no solid evidence that Cadwell is anything other than a Madman that was sacrificed to Molag Bal and turned into a Soul Shriven.