Where you've started is pretty much where you'd end up with using all of the teams when you reached the 1024 stage. There would probably be a few upsets here and there, but it's not enough to make a difference. This is a really good idea. Wish I had come up with it.
I saw the 1966 Orioles advance in Group 2. It will be a victory for me as long as one of the Yankees teams don't win it all.