ATNotts - if you book a through ticket then I think the full APD is charged. However, if you book separate tickets then only the UK- Europe APD is charged. I do this regularly by booking long-haul Business Class from Europe and buying a separate economy ticket to the European hub. Baggage can be interlined without any problem but, of course, you do have to allow a lengthy connection time to cater for any delays.
Madrid - Iberia have cancelled the MAN and GLA services to MAD as from the end of August / mid September. Not much hope then of attracting them to BHX.