I'm nearly certain MPen does -not- work with those things. Even though I could be wrong... I thought the same rule applied to things such as Sunfire capes.I never once saw Azen buy Rageblade.
Also, MPen works with Madred's/Wit's End/Malady/etc as far as I know. I haven't tested it myself but it would be pretty ****ing silly if it didn't.
Also, if you're counting the rest of Madred's, then it still scales upwards with Crit and Damage and Armor Pen and all the other standard ****. If you're going to count that negative, it's stupid to not count the positive aspects of it, but we're talking about the on hit proc (since you're saying it only scales upwards with attack speed and MRes reduction).
And, increasing your attack speed increases the damage your auto attack does, while increasing amount of damage your madred's bonus does. However, getting critical chance does not scale up your madreds.
So Base 100 AD + 80 damage (2000 HP). Total 180 damage. +40% Attack speed is being applied to those two things. Crit damage is increasing only the former. At the time, an auto attack is dealing 9% of their health. Increase that to 2500 HP and its 100 + 100 which is only 8% of their health, etc etc. Health is reducing the effectiveness of your total dps, either way, especially considering that 4% of the health is mitigated by magic resist.
Base damage and the AD bonus you get on madreds exists in the formula, no carry is 100% scaling. We were talking about madreds as a DPS item, right?