What are the forces that are keeping Dredge at 10-20% metagame penetration? Why does its performance seem to be localized into certain areas (Manila, Philly, NY)? At what point do players begin to crack 8 hate cards? 10 hate cards? Is there a balancing mechanism inherent in fighting such a linear strategy - will its success create a feedback loop or has the deck gotten strong enough to move past that? What happens if the field is 30% Dredge? 50% Dredge? At what point do you start playing MD hate cards? Will we ever reach that point, or is sufficient SB hate enough of a balancing mechanism? Will combo ever be sufficiently popular to suppress Dredge or is hate the only answer?
1) What are the forces that are keeping Dredge at 10-20% metagame penetration?
In my experience, Dredge is most often less than 10% of metagame penetration. It was 8% of the
Waterbury last year. It was 9.5% of the field at the
Bazaar of Moxen. The first force keeping Dredge at that level of the metagame is the fact that Vintage has a good deal of diversity. With so many options to select from, it's difficult for any given archetype to make up more than 10% of the field. When you consider all of the options: Workshop decks, Oath decks, Mana Drain control decks, Fish decks, Dredge, Combo decks and then other options, it's almost impossible for anything to be much more than 20% of the field. There are simply too many options for a such deck to take up such metagame space.
In legacy, it's very rare for any but the very top deck in a field to actually make up more than just slightly above 10% of the field. In Vintage, the most popular archetypes sometimes can make it close to 20%, but it's still rare that a single archetype make up more than 20% of the field. Natural diversity puts a hard limit on the proportion of a field that Dredge can occupy, mathmatically.
The second force keeping Dredge at or below 10% of the metagame is card pool accessibility. Bazaar of Baghdad is an exceptionally rare and difficult card to acquire. There are more Black Lotuses in existence than Bazaars, by far. People are probably more likely to own power than Bazaars, and certainly more likely to be able to assemble a Tezzeret or Oath deck, let alone Fish.
A related, and third, force is the desire to play with cards you own. Even in proxy environments, fully powered or partially powered players are probably -- as a general rule -- more interested in playing with their power than not. If more people own power than Bazaars, that's a factor that will reduce the amount of Dredge in the field.
A fourth force is the fear over the hyper linearity of the deck. While I know that Dredge is really a very interactive deck, in the sense that post-board games are a pitched battle, many players probably fear playing a deck against dedicated hate, and prefer more flexible answers like Force of Will decks.
A fifth and related force keeping Dredge to a more modest proportion of the field is the availability and quantity of Dredge hate. While Dredge is a great deck, it can actually just lose to a deck with a sufficient amount of hate post-board, and that loss will matter in the elimination rounds of a tournament. PLayers who want to win tournaments may not feel comfortable playing a deck with such features. I acknowledge that this is largely true of most decks, but there may be a perception that it's more true in the case of Dredge.
A sixth force keeping Dredge in check is experience/mastery. While a player may be able to assemble the Dredge deck, they may not have the experience necessary to successfully and optimally combat hate. Whereas, they may have plenty of experience with another archetype. Observing Dredge masters winning is not sufficient here because people may not believe that they are capable of doing the same. Experience is and has always been a real barrier to entry. Having a great deck is of little value if you don't feel confident in your ability to execute.
2) Why does its performance seem to be localized into certain areas (Manila, Philly, NY)?
I suspect this is largely perception, and that it's performance is not as localized as you may think. Rather, there may be particular areas where Dredge is not either present or played well, but that doesn't mean it's largely localized.