How come the events of Rebellion are possible, with Madoka's wish?

Question

It seems to me that, no matter how you look at it, the events of the Rebellion movie are impossible due to Madoka's wish. Her wish-speech can roughly be split into five distinct parts (significant differences between Meguca's and Doki's translation marked):

1. I want to [erase/eliminate] all witches before they are [even] born.
2. [I will erase] every single witch in every universe, past and future, with my own hands.
3. (I don't care what you call it. All those magical girls who held onto their hopes and fought against witches - I don't want [to see them cry / them to cry]. I want them to remain smiling until the end.)
4. I will destroy any rule [or law] that stands in my way; I will rewrite them all. This is my [desire/prayer], my wish.
5. (Now, grant me this, Incubator!)

The pars in brackets are most likely not part of the actual wish, as we later clearly see that magical girls are not constantly smiling, not to mention that that would be a very weird wish to make for Madoka. So, only #1, #2 and #4 are the actual wish.

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Now, in Rebellion, Kyubee apparently manages to create a barrier that shuts out Madoka and causes Homura to turn into a witch in her own world / soul gem. However, this contradicts the wish, as Madoka does not allow for any exceptions to be made. Even if we were to argue that a barrier is not a rule, and hence not subject to #5 (even though the fact that Madoka is barred from entering would be a rule), #1 has no limits whatsoever, and should prevent Homura from turning into a witch. Possibly, we can grant that this may happen not through Madoka's own hands (as we might say that Homura's world is not part of any universe and hence #2 does not apply), but turning into a witch is still impossible - her wish isn't "I want to eliminate all witches outside of barriers before their are born", after all.

Furthermore, Homura "splitting" Madoka into Madoka and the Law of the Circle is another such impossibility. #2 says that Madoka - and not the Law of the Circle - will (not can, will - she herself has no choice in the matter anymore) do it with her own hands (provided it happens within a universe). In fact, you might argue that, after the split, the Law will not do it, as it was Madoka, the human, who made the wish, and so, if Madoka, the goddess, and Madoka, the human, are no longer the same entity, it's the latter who has to do it (whether she lacks the power or memory to do so is once again irrelevant - the universe would be changed so she can do it anyway).

Effectively, the problem is the universal definition of her wish - it has no limitations, and several universal quantifiers, and hence can not really be circumvented.

There are even further issues, but they depend on how exactly you interpret the terms "rule" and "universe".

Answer 1

Madoka only had 1 wish, to erase all witches no matter where they are. 1 and 2 are the extent of the wish, 3 is her reason for her wish, 4 is her determination and 5 is just her telling the Incubator to grant her wish.

in the new universe, witches still exists, they will always exists so long as there are magical Girls, however thanks to the Law of Cycles Madoka will arrive and save the Magical Girl before they transform so on the outside it looks like they don't exists and all that happens is the Magical Girl is claimed by the Law of Cycles.

As for your comment about the Magical Girls not smiling:

as we later clearly see that magical girls are not constantly smiling

this is because they know they'll become witches but after Madoka assures them they won't, that she'll stop it before it happens, they begin to smile.

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With Homura, she didn't become a witch when the Incubators first kidnapped her. Her Soul Gem was progressing to that point and the Incubators would have observed and theorized at what point the Law of Cycles will occur and thanks to Homura explaining the original system, know there's a stage after this. They created the Isolation Field that blocks out all external influence.

Kyubey places Homura's Soul Gem in an Isolation Field - a space that blocks out all external influence, including the Law of Cycles. However, the Isolation Field prevents Homura from being born as a witch, meaning that Madoka's wish is not invalidated. (Although not directly stated, it's implied that by creating a space where the Law of Cycles cannot enter, Kyubey blocks Madoka's omniscience.) Ultimately, a witch barrier forms inside Homura's Soul Gem. Kyubey allows the barrier to draw in victims, including Mami, Kyoko, and Madoka's family. Kyubey believes that this will eventually cause the Law of Cycles to materialize in the barrier. Kyubey's goal is to observe the Law of Cycles, which would ultimately allow him to interfere with and control it.

Source - Madoka Kaname - Madoka in The Rebellion Story

Now remember the Incubators are incredibly advanced and through Homura they are aware of the existence of the Law of Cycles but just don't understand it, just like how they don't understand how Magical Girls exist in the first place (yet can still create them).

Now when Homura transforms into Homulily the Law of Cycles (Madoka) has already been trapped in the Isolation Field but the Incubators are unable to do anything in terms of manipulating Madoka as she gave up her memories and powers to Sayaka and Nagisa. For the time Madoka, Sayaka, and Nagisa were in Homura's Labyrinth, the law of Cycles was missing from the universe.

However, Madoka is aware of Kyubey's plan. She enters Homura's barrier with Sayaka and Nagisa Momoe (the magical girl who became Charlotte) ... Madoka entrusts them with her memories and powers in order to fool Kyubey, and allows Homura's barrier to alter her memories and suppress her powers.

and it's only after the field is destroyed does the Law of Cycles return and Madoka descends down to claim Homura.

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Now for Homura splitting Madoka, after being released from the Isolation Field Madoka is still in her human form (though she looks like her goddess form). This is demonstrated by the fact Mami and Kyoko can see her when in the past when Sayaka was claimed by the Madoka, Mami only assumed she was taken and they didn't even know about her. This is most likely due to the fact she is still just recovering her original form, having given up all her powers to Nagisa and Sayaka. In this form Homura could interfere with the Law of Cycles and stop her from purifying her soul gem which now fills with something else.

As she comes down to take Homura's Soul Gem into the Law of Cycles, Homura grabs Madoka's hands before her Soul Gem can be purified. Homura's Soul Gem turns black, and then fills with a new color. (It's unclear if this color was something that had already existed in Homura's Soul Gem, or if it is the result of Homura grabbing Madoka and interfering with the Law of Cycles). Homura's actions causes reality to crack. Madoka is then separated from Ultimate Madoka (it is unclear if Homura deliberately caused this, or if it is the result of Homura's interference). The colors inside Homura's Soul Gem explode outward. The cracks perpetuate throughout reality, followed by the colors of Homura's Soul Gem, which engulfs the universe.

Homura then ascends to becomes a new goddess/demon and rewrites the universe with new laws to facilitate her existence and how own control over the universe (as we see where she can suppress Sayaka's powers and memories), particularity allowing Madoka's existence as a person before she became the Law of Cycles. It's not made clear how the Law of Cycles is working now but we can assume it's fundamentally broken as Sayaka asks Homura if she is planning on destroying the universe. We know that if Madoka remembers who she is she'll return to be the Law of Cycles (which Homura actively tries to stop) but regardless Homura is not a witch so even if the Law of Cycles was working she would be immune.

Now I should point out that we don't know the full extent of Homura's actions as one of the things Homura did was force the Incubators to manage all the curses. We can not be sure if they have the opportunity or were even able to create new magical girls. Since witches come from Magical Girls, if the Incubators can not make any more then there's no more witches thus leading the Law of Cycles to no longer be needed.