In any case, the wording of dispel magic doesn't prohibit it working on any other magical effect.
So, Dispel Magic can dispel creatures and objects then? For example, a creature like a vampire or an object like +1 armor can be dispelled because the first sentence states that the target can be a creature or an object (just like with your interpretation , the first sentence states that the target can be a magical effect)?
The first sentence is only target selection (Choose one creature, object, or magical effect within range). That's all the first sentence is. The second sentence and third sentence indicates what the spell actually does. It dispels spells.
Sorry, but you are reading a lot more into that spell than it indicates (and hence, the OP's question).
According to your interpretation, Dispel Magic can dispel a glowing +1 sword. Err no, it can't. It can do so in your game with your "assign a DC" house rule. But it's fairly clear from the wording that the designers only wanted it to affect spells, not magic items, vampire charms, Mythals, or any other source of magical effects. Earlier versions of the game allowed Dispel Magic to suppress magic items for 1D4 rounds and such, but that is no longer the case. Dispel Magic can no longer affect areas, nor can it be used as a counterspell, nor can it affect spell-like effects. All four of these features are no longer part of the Dispel Magic spell.