I tend to view the top level pure street guys as around even - Dredd, DD, Batman. Cap slightly above those (arguably Bats a bit above DD too but same ballpark).
Disclaimer: peak Dredd. It's always worth baring in mind that Dredd ages in real time, so current Dredd is miles away from where he used to be formidability-wise.
Yes, definitely so. Even the same writers tend to treat him differently as the story depends (welcome to comics!).
From a strict continuity view-point though, he is well-established as being less than he was for a very, very long time. In fact, the first time he was explicitly stated as being less good than he formerly was was 2000AD #585 I believe, published in 1988 - for the record, five full years before the Dredd/Batman h2h fight. By that time, there had been numerous stories telling us in explicit terms that Dredd was less of a beast than he had been a few years ago, especially in h2h fights.
Not necessarily a factor in the crossover specifically, but worth considering.