USA is a huge country and most European countries are relatively small, so the Dream Teams are going to outclass the average European squad in every way. USA teams are bigger, more athletic, and more skilled. But the physicality of the USA squads ain't anything special. You don't remember little Greece muscling the USA squad into a loss?
Dragic?
You're claiming that European players lack physicality and your example is Dragic???
Dragic's skinny but he deals great with physicality and he's physical himself. He finishes with contact in the lane all the time and he puts a body on guys too. Remember when Clarkson tried to fight him because he was getting tired of Dragic pushing him around? This is a point guard who has been averaging 16-20 ppg while shooting 66% for his career at the rim with about 1/3 of his shots there. He is PLENTY physical.
You didn't watch Heat-Sixers last playoffs, did you? Claiming that Dragic is an example of European lack of physicality.