At $120M and up, offenses are pretty tough to pitch to. Use Pedro 2000 as an example. If every team in the AL that season had the equivalent of $120M in payrol, with no bad contracts, and no injured players, what would his stats have been? It might still have been one of the best pitching seasons ever, but his WHIP would not have been close to 0.74, OAV would have been a bit higher than .167, and BB/9 well above 1.33.
The Devil Rays' lineup was Gerald Williams, Greg Vaughn, Dave Martinez, Fred McGriff, Herb Perry, Miguel Cairo, Felix Martinez and John Flaherty. A strong team such as Cleveland had Manny Ramirez, Roberto Alomar, Kenny Lofton and Albert Belle, but also had David Segui, Richie Sexson and Einar Diaz. There are not many Einar Diazes and David Seguis in a $120M cap.
The same is true for hitters. After facing Pedro, teams playing the Red Sox got Rolando Arrojo, Tim Wakefield and Jeff Fassero. Carlos Delgado hit .344 with 41 homers for the Blue Jays in 2000. What would his totals have been had the Sox followed Pedro with Maddux and Pete Alexander? .260/20?
So yes, the numbers are skewed at $120M. Whether that's "unrealistic" depends on how you define the term. If it means "that's not what they did in real life," that's true. If if means "what would they have done had this been a real league," it's pretty realistic most of the time when we factor in slumps, sample sizes and lots of extreme ballparks.