What is the best way to implement sub teams under a main project team and use iteration plans?

I have created a main team and underneath it I have created subteams.
For example: Overall Team
Team 1
Team 2
Team 3

Under work item categories I have created categories to match the team names, team 1, team 2, and team 3.

When I do the association, I have tried to associate each team (team1, 2, 3) with the overall team (inherited). I have found this way to be almost what I am looking for, however I have found that I cannot change the team area folder from the release plan view, I can only update the filed against item for individual artifacts. I also cannot see what teams are going to be working on what when I go into the iteration plan.

If instead, I change the association so that each team is associated with the team work category (ex: team1 -> overall team/team1, team2 -> overall team/team2, etc) it appears to be a little better, however when I go to my iteration plan and look at the planned items, the list is blank. It appears that if I change the settings of the iteration plan to have a specific team area for team1, then I can see the team1 iteration 1 items. So it would seem in this case that I would need to have iteration plans for every team? If I try to change the team members choice to project area, it tells me that there are no categories associated with my project area.

Can anyone give me a little guidance as to what the best way to set all of this up would be? I'd like to use all the built in charting capabilities of 2.0 and have each team have its own area, but I don't want individual iteration plans, I only want on iteration plan. I'm fairly new to RTC so if I need to clarify anything to make more sense, please let me know!

Thanks!