Yes, team 2 is better. But please drop Favre as the 3rd QB; that's just gross. You arguably don't even need a backup with Brees, but Schaub is very good insurance policy. Favre is a waste of a valuable roster spot, particularly in a 10 team league where some decent guys should be out there. Ideally, maybe Norwood is out there as a handcuff; if not, get any skill player in the world instead of Favre.
Team 1 owner a Bengals fan by chance? If they return to form this year, he would reap the benefits.