Line a 9x9x2-inch baking pan with foil, extending the foil over edges of pan. Generously butter foil; set pan aside.
In a 4-quart heavy Dutch oven heat the 1/4 cup butter over low heat until melted. Stir in marshmallows. Cook and stir until marshmallows are melted. Stir in marshmallow creme, malted milk powder, and vanilla until combined. Remove 1/2 cup of the marshmallow mixture; set aside. Add cereal to the remaining marshmallow mixture, stirring gently to coat.
Transfer cereal mixture to the prepared baking pan. Using a buttered spatula or buttered piece of waxed paper, press mixture very firmly and evenly into pan. Spread the reserved marshmallow mixture over cereal mixture. Sprinkle with malted milk balls; press down gently.
Using the edges of the foil, lift uncut bars out of pan. Using a buttered long knife, cut into bars. If desired, drizzle with hot fudge topping before serving.