MENTALLY CONTROLLED TENTACLES: When he makes a close combat attack Doctor Octopus can use Giant Reach: 3 and Improved Targeting: Ignores Characters. Give him a power action to make 4 close combat attacks that deal 2 damage. After actions resolve modify the defense value of any character hit more than 2 times by these attacks by -2 until your next turn.

Would these 4 attacks activate damage depletion modifier? Like 2, 1, 1, 1

Or since the action states that 2 damage is the damage from each attack (similar to a locked value) to would they not deplete? Like 2, 2, 2, 2

Each attack will deal 2 damage. That's just how much damage those attacks deal regardless of perplex, DDM, etc.

HOWEVER it will still activate the DDM. It won't matter for those attacks. But if he somehow was able to make another attack afterwards that didn't just deal 2 damage that attack would be looking at a -4 damage modifier. (yes, yes rule of three and minimum of one mean most of that won't matter but that's still the modifier)

The DDM applies to the damage VALUE of the character. Damage DEALT is a different thing and is not governed by the DDM (or the rule of three and such).

That's why I can Perplex my damage up by +3 and then effectively get a +4 with a crit hit.

Totally off topic, but they need to do a power that lets him capture a character and deal 1 penetrating a turn as some kind of "tentacle squeeze" but still let him take actions normally even while holding the person. Captured character released when he gets hit by another attack or maybe a roll each turn like the Batman 66 'deathtraps'.

That's what he always does, capture some bystander until they break free or he gets distracted by something else.