I'm not sure if you're intentionally misunderstanding or not, but I'll give it one last whack, cause hey why not:
Warding Blades is used, pushing A and B
Code:
.........
.A..@..B.
.........
A's turn - starts to move closer.
First square:
Code:
.........
..A.@..B.
.........
_DECLARES_ second square, but before gets to move into that square, Warding Blades interrupts with 'Hey, I get to make a melee basic attack'
Position at time of OA:
Code:
.........
..A.@..B.
.........
If @ has a reach weapon, all is well. If not, his attack is disallowed due to the target being out of range.
A completes movement into the second square AFTER the OA interrupts:
Code:
.........
...A@..B.
.........
As an immediate reaction to the movement, repulsion armor forces him 1 square away.
Code:
.........
..A.@..B.
.........
So A goes 'Eh, I still have 2 more squares of movement' and moves 1 square closer
Code:
.........
...A@..B.
.........
And the avenger is sad, cause it was not nearly as cool as he hoped.
Now, I should note that I personally feel that it working this way is because the person designing the power _made an error_ and intended for the attack to work without a reach weapon. But you can't really prove RAI unless an author actually posts.
An immediate reaction would have worked better, as would just dealing automatic damage, or allowing the avenger to shift instead of make an attack, or any number of things. Technically a free action could also have worked, but is perhaps stronger than they intended.
But hey, you asked the rules, so there ya go.