Ahem...
A lot of the logic upon which Kratos's win is predicated seems to be that he would absorb large chunks of Madara's AP and Dura over time... I do not see this as being the case. Unless this power draining effect is explicitly percentage based or some such in some way, I can't see it draining that much more than his max AP per hit, at most... which is what, 40+ Petatons per hit via scaling from Atlas? (Probably closer to 60 or so, given how far Zeus/Power of Hope are above Atlas, but oh well)
If that's what he leads with, then yeah, he might start chipping away at that difference fairly quickly I guess, but with Madara's... 3.8 Zettatons or so, that's not at all as drastic as you seem to say. What are the mechanics behind this power-steal, anyways, out of curiosity?
At any rate, Standard Battle Assumptions in play, they start 4 kilometers apart, right? And within line of sight presumably? The moment Kratos makes any motions, Madara's pre-cog will pick up on them, since it would at least initially require some brief amount of acceleration- even if he is much slower, Madara would still be able to at least react to it, in much the same way that a human can react to a fast, but far away, vehicle.
If Kratos does lead with Blades of Exile, Madara will not only know where he's swinging, but he'll be able to throw out several Limbo clones to intercept (on top of immediately thereafter using Susano'o to just Barrier himself in from all directions.)
Kratos has... not put himself in a good situation at this point. He's definitely faster than any of his opponenets, but there's at least six of them, all right next to him since he would have pulled himself adjacent or Madara to him after the attack, and after his next few actions its very possible that Madara's next move would be dropping more summons to stack the pressure. On top of all of this, the Infinite Tsukiyomi is constantly trying to mess with him in the background- I understand that Kratos's mind hax resistance is pretty crazy, but it is also worth noting that IT mind-haxxed an entire planet full of people, including a sizable contingent specifically trained to counter exceptional genjutsus, without any real hassle at all. I have a hard time believing that Kratos wouldn't be at least mildly phazed/slowed down by this...
So, Kratos's next few moves at this point are crucial, because unlike Madara he doesn't have the advantage of being able to one-shot with whatever attack he happens to choose from his gigantic pool (many of which have such stupidly massive area-of-effect that Kratos might not be able to wholly dodge even with his immense speed.) So, what are his options...?
> Block/swat away a Limbo clone. This is an awful idea, as the raw force behind it compared to Kratos would shatter his arm, possibly stagger him briefly, and as a consequence of these two things very possibly get him merced before he has a chance to reposition/recover/what have you.
> Throw out some AoE energy attack. With the immense AP difference, this fails to do more than singe Madara's coat, but let's say for the sake of argument that he threw out his Poseidon's Rage, which evidently can atomize people it hits.
I am...
very skeptical of this being some kind of molecular hax, as
the description of it mentions nothing of the sort. To use an example of what I'm getting at-
Raiden, in Metal Gear Rising, has a High-Frequency Blade which explicitly seperates the molecular bonds of physical matter it is swung at. This can be considered molecular hax. Poseidon's Rage, on the other hand, seems to simply be an AP feat that we consider vaporizing due to how it appears- it mentions nothing about specifically targeting the molecular bonds of its targets or anything of the sort. So, we have no reason to assume it can vaporize people above his weight class, let alone hundreds of thousands of times so.
> Time Manipulate via the Amulet of Uroboros. It's questionable whether or not it'd be able to pierce Susano'o I think, but assuming it does Madara full well might not dodge it even with the extra distance he's got, and would probably be his best bet for regaining his old speed advantage.
> Wail away at Susano'o... not working. At most, he might snatch a bit of AP/Dura.
> GTFOing out of there before Madara does something crazy. Kratos generally behaves like a berserker out for blood rather than developing complex strategies, this doesn't seem in-character.
> Using Petrify. Again, assuming Madara doesn't react to it with Precog. following by Izanagi-cheat death, and its not blocked by the gigantic Susano'o chakra wall between him and Kratos, this'd definitely be his best bet, as Madara lacks Transmutation Resist iirc. However, this also seems out-of-character, as Kratos enjoys killing his foes in spectacularly brutal fashions if it can be chosen over anything else. Plus- correct me if I'm wrong- don't most GoW bosses resist Petrify? He'd probably assume the same holds here, against this "ultra-boss", as it were- and not bother trying, I would imagine.
> Something else to the tune of one of these things.
And if he's dodging all five attackers in the middle of all of this, still,
and the Truth-Seeking Orbs that have just been passively flying out this whole time deleting everything they touch (a little NLF-baity, I know, but it definitely ought to work on beings weaker than him), then Madara's next attack would be... not one of his strongest things, certainly, but probably either Wood Dragon or Great Fire Destruction. The AoE on both skills being as massive as they are, and the danmaku hell Madara's set up at this point, make it a good deal more likely than not that Kratos is getting clipped by something or other, and with the AP difference even getting clipped once is likely the end of it on its own.
...after the battle, of course, Kratos's self-ressurection would begin to kick in, but I don't really doubt Madara would be able to see that happening either. The first listed power of the Sharingan is it's ability to perceive the flow of
Chakra- both spiritual energy (i.e. souls/psyche) and physical energy, and what binds the two together. He would definitely be able to
see that Kratos's spirit is beginning to resurrect itself, promptly begin to take the battle utterly seriously because self-resurrection is kind of a big deal in the Naruto-verse as far as how much of a threat its considered, last I checked, and proceed to Human Path/Naraka Path to incapacitate for at least long enough to count as a victory, or Preta Path and disperse his chakra that way (preventing the spiritual/physical energies from properly reconnecting with one another)... etc.
Yes, Kratos has Resistance to Soul Manip. to at least partially stop that from happening, and to Power Null so that Madara can't just throw out Chakra Chains and fix the problem that way, but all things considered I see the fight going to Madara at least 7, maybe 8 of 10 times. Even if Madara can't stop him from coming back forever via Power of conceptual Hope-et cetera, he certainly can long enough to call it a win and go run off to somewhere else.
P.S.: I'm pretty sure saying that the Blade of Olympus would just eat Susano'o on contact is also NLF, since it's based on similar logic to the Blades of Exile thing.
P.P.S.: If Kratos started with a ranged attack like, say, Apollo's Bow, Ice of Poseidon, etc., it's probably not going to turn out any better. Kratos's hax don't work that well at range, and with the AP difference it'd just be like shooting nerf darts at a mildly aggravated steel wall. Madara would have time to set up a bit more and/or toss out a Lightning Dispatch or Chibaku Tensei as a show of force, Kratos would get pissed and close the distance upon realizing that range isn't exactly his game to play in this match-up (assuming he doesn't get nuked from orbit like a dumbass, which I wouldn't expect to happen), and it likely proceeds from there as prior described.
So, yeah. That' smy argument I guess.