IMO This is what should be done with Rageblade.

The problem: Rageblade should theoretically be a widely appealing item because so many champions have on-hit effects (in their kit, or items they commonly build) that would benefit from Phantom Hit. However, the item as it is is only used by a handful of ADCs, skirmishers, and Kayle. In rarer cases, it's built on fed bruisers. This isn't terrible, and it certainly could be worse, but I think the game is better when champions have more items they can choose from.

The champions most underserved by Rageblade right now are melee bruisers. It's subpar on Irelia, Nocturne, Olaf, Shyvana, Skarner, Trundle, Udyr, Vi, Warwick, Xin Zhao, Volibear, Kled, Shen, and Jarvan, even though they have abilities or build items that benefit from Phantom Hit.

I think the solution to this is simple. Drop the AP on the item, and add Health in its place. That also means losing the magic penetration, and lowering the total price of the item. You see, the reason Rageblade works on ADCs but not (say for example) Titanic Hydra Shen is because Rageblade is an expensive, pure damage item. It's hard to justify purchasing on a bruiser if you're not very fed, because you need gold and item slots for tank items. The most you can usually get away with is one or two offensive items with defensive stats like lifesteal or health, like Blade of the Ruined King or Black Cleaver. They absolutely can't be wasting gold on stats they don't need like AP. Skirmishers like Jax, Tryndamere, and Master Yi can invest much more into damage because of strong defensive mechanics in their kits, and marksmen can build pure damage.

After changing Rageblade's stats, I would look at champions abusing the item. Removing the AP from Rageblade means that Master Yi would almost certainly be too strong with the item, that and the magic penetration act to counterbalance the exceptional synergy Master Yi has with Phantom Hit. Nerfing Wuju Style should be a simple fix, this hits his Rageblade synergy hardest and he would still have access to Conqueror if he needs more true damage. Speaking as a Master Yi main myself, I think this would be a fair trade off.

This kind of leaves Kayle out to dry, but she's getting reworked soon so she'll be totally rebalanced anyway.