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Okay, I won't argue methodology, and I understand where you're going here. But looking at the formula above and breaking it down:

=IF(X2>=20,20+(((X2-20)*20)/((X2-20)+20)),X2)

IF X2 (Points for)is greater than or equal to 20 then:

20 plus
A. Points For-20
B. A*20

Then you divide it by the result of this:
C. Points For -20
D. C + 20
Shouldn't that (C & D, where you take the points, subtract 20 then add 20) always just equal the points for? Am I misreading your parentheses here?

For a diminishing return can't you just say
IF(X2>20,20+((X2-20)^(3/4)),X2)
This gives you a curve where a 30 point victory is closer to 25, 40 closer to 30, 50 is around 32.5, etc. If you change the 3/4 to a lower number, it will flatten the curve more, if you raise it above 3/4 it will go higher.

Now, to do the same for your points against, you want a similarly shaped curve, but the value at 20 to be close to 20. From playing around at https://www.desmos.com/calculator, I found this might be good for what you're seeking: x^(1/2) * 4.5. This gives you a value of 10 points when 5 are given up, ~15 when 10, etc.

Plug it into that calculator and you can change the numbers to get a curve you'd like, then just convert that to Excel language.

Hope this helps, let us see the output when you're done!

Check this book out http://www.amazon.com/Whos-The-Science-Rating-Ranking/dp/0691154228

Goes over different ranking methods people use to rank sports teams. It will go over the initial method Massey used which he has since tinkered with but it will get you started.