The quantum Stein's lemma is a fundamental result of quantum hypothesis testing in the context of distinguishing two quantum states. A recent conjecture, known as the ``generalized quantum Stein's lemma", asserts that this result is true in a general framework where one of the states is replaced by convex sets of quantum states. In this work, we show that the assertion of the generalized Stien's lemma is true for the setting where the second hypothesis is the state space of any subalgebra $\mathcal{N}$. This is obtained through a strong asymptotic equipartition property for smooth subalgebra entropies that applies for any fixed smoothing parameter $ε\in (0,1)$. As an application in resource theory, we show that the relative entropy of a subalgebra is the asymptotic dilution cost under suitable operations. This provides a scope to establish a connection between different quantum resources.