It's an interesting ambition, and I have heard of teams making it to D-3 with home drafted teams. However, the problem lies in the training. Since you cannot concentrate on training certain positions, every player you train will probably not reach a high enough skill level to progress much farther than that. If you do try to train each player to the fullest...I believe I read in the forums somewhere that someone tried training an entire team to a good skill level. To do this, he drafted big men first, trained them to be as good as possible. Then, he drafted guards and trained those. Unfortunately, by the time his guards were "good enough," his big men were nearing old age and had to be sold.
Of course, if you have no plans to progress past D-4 or D-3, then by all means, continue with your plan. If you do plan to go farther, however, I suggest that you make only half your team home drafted. Either train your guards and buy the big men, or train the big men and buy your guards. If you take my advice, then I suggest training the guards and buying the big men. Centers and power forwards are abundant in the market and thus are also cheaper.