Who is not being realistic? Where is anyone calling England favourites of any kind? You're arguing against yourself.
As for Lallana...I'm not sure he really fits into a team playing deep and looking to hit on the counter. He slows down the play too much in possession and isn't very quick getting forward. His passing from deep isn't the greatest. He's a good transition player to link up with other more direct players, he presses extremely well and his link up is good in shorter distances. He can be really streaky in the final third but when he's on he's a big threat there too. That said he would fit in better to a 3-5-2 than a 3-4-3 IMO. He's not much of a wide player. I could see a midfield 3 with Dier/Henderson as the holder behind Lallana and Dele with Chambo as a back-up working really well (assuming Lallana can stay healthy, and comes back strong from his injury). Realistically their best 11, IMO, come the summer would probably be this (IMO):
Pickford
Gomez - Jones - Stones
Walker -------- Dier* -------- Rose
Lallana** - Dele
Sterling
Kane
With Sterling and Kane having freedom to roam. Guys like Maguire, Bertrand, Henderson, Chamberlain, Rashford and Sturridge deputizing (*Henderson could start over Dier, **Chamberlain could start over Lallana if he continues to develop).
EDIT: So basically what Havre suggested but I don't think Sterling struggles centrally. He was fantastic there with Liverpool, though that was behind Sturridge/Suarez. He still looked fairly good as the focal point in Rodgers' side the next season playing centrally but his final ball left a lot to be desired. I think playing with Kane and Dele that would be less of an issue.