I've read what everyone's said and it got me to thinking.
So, let's start with Mustang. He has flame alchemy that is good for range attacks, he can keep his cool in a fight, and he's smart most of the time. However, his alchemy won't do so good at close range, it'll work but he'll probably damage himself. He can keep his cool but sometimes certain things make him flashback to the Eastern Rebellion. And, we all know how forgetful he can be...in the rain.
Now, onto Armstrong. His whatever alchemy is good for range attacks and he can do close combat with his muscles(and sparkles). That's 'bout it for pros. For the cons, he can get too emotional about things and I have a feeling that most of you are right about the loyalty to Mustang. Armstrong would probably back down if he saw he had a really good chance of winning.
All in all, it really depends. There's too many variables to the fight that are unknown to us so we can't really make a good desicion. And making a choice based off of favoritism is kind of lame and biast.