Yeah that's pretty sick. I might give team 2 the edge over you because of pitching. Team 3 could win any given week with those arms too, but you've got the best bats.
Lucky drafts and lucky trades can give you sick lineups. Last year I managed to swing Pujols, Utley, Hanley, and Howard in a 12-teamer (with Webb, Smoltz, and Harang as my arms), so it can be done. I didn't do anything super special to get that team, either. Sometimes you just get lucky.
Dominate is a verb. Dominant is an adjective.