It scales in the sense that the enemies are level 50 if the team is. It doesn't get better AI or grant the mobs extra abilities, however, because the same enemies are fought at level 35 as at 50.
The purpose of Incarnate, besides my previously stated personal opinion, is to give you something to work for once you hit max level. It's Plus Ultra mode, it needs to feel appreciably stronger than just being level fifty. If level fifty content got stronger with you at that point, it wouldn't be level fifty content, it'd be Incarnate content.