Thirty straight innings without an earned run is not dominating? Worst ERA in baseball is not bad enough for you for him to be considered bad?
I watched that Yankees game--his best game of the year--and he was extraordinarily lucky. He had the bases loaded with nobody out and the heart of the order coming up in the first inning, and the Yankees didn't score. He left the bases loaded in the second inning and only gave up one run. If he isn't so lucky in either of those innings, the whole fan base would be clamoring for a DFA.
What we saw last night is a decent game for him. It's why he has a 7 ERA or something. I would argue that the Twins have five pitchers who would be better right now and who would have a future with the club beyond the trade deadline (May, Johnson, Meyer, Darnell, Gilmartin). If you have both those things for any one pitcher, you should make the move now. The fact that they won't do it is a slap in the face to fans.