I've got ${\bf v} = x^2\partial_x$, and I'm trying to find $\exp(\varepsilon{\bf v})$, but I'm having some trouble.
If I define ${\bf v}^{n+1} = {\bf v}{\bf v}^n$ then I get a different outcome to ${\bf v}^{n+1} = {\bf v}^n{\bf v}$.
For example:
$${\bf v}^2 = {\bf vv} = (x^2\partial_x)(x^2\partial_x) = x^2(\partial_xx^2)\partial_x = x^2(2x)\partial_x = 2x^3\partial_x$$
$${\bf v}^3 = {\bf v}{\bf v}^2 =(x^2\partial_x)(2x^3\partial_x)=x^2(\partial_x2x^3)\partial_x = x^2(6x^2)\partial_x = 6x^4\partial_x$$ $${\bf v}^3 = {\bf v}^2{\bf v} = (2x^3\partial_x)(x^2\partial_x) = 2x^3(\partial_xx^2)\partial_x = 2x^3(2x)\partial_x = 4x^4\partial_x$$
Using ${\bf v}^{n+1} = {\bf v}{\bf v}^n$ gives $$\exp(\varepsilon {\bf v})x = \frac{x}{1-\varepsilon x}$$
While using ${\bf v}^{n+1} = {\bf v}^n{\bf v}$ gives $$\exp(\varepsilon {\bf v})x = \frac{x}{2}(1+\mathrm e^{2\varepsilon x})$$
In both cases, when $\varepsilon =0$, we get just $x$, i.e. the identity element. Also, in both cases, we get $$\lim_{\varepsilon \to 0} \frac{\mathrm d}{\mathrm d\varepsilon} \exp(\varepsilon {\bf v})x = {\bf v}$$
The same ${\bf v} \in \mathfrak g$ can't possible generate two different flows, can it?
If you apply the product rule carefully, you don't get two different answers. In your example, \begin{align*} \mathbf{v}(f(x)) &= (x^2 \partial_x)(f(x)) \\ &= x^2 f'(x) \text{, and }\\ \mathbf{v}^2(f(x)) &= (x^2 \partial_x)\left( (x^2 \partial_x)(f(x)) \right) \\ &= (x^2 \partial_x)\left( x^2 f'(x) \right) \\ &= x^2(2x f'(x) + x^2 f''(x) ) \text{, or } \\ \mathbf{v}^2(f(x)) &= \left((x^2 \partial_x) (x^2 \partial_x) \right) (f(x)) \\ &= (x^2(2x \partial_x + x^2 \partial_x^2))(f(x)) \\ &= x^2(2x f'(x) + x^2 f''(x) ) \end{align*} so we see $\mathbf{v}^2 = 2x^3 \partial_x + x^4 \partial_x^2$. Similarly, $\mathbf{v}^3 = 6 x^4 \partial_x + 6 x^5 \partial_x^2 + x^6 \partial_x^3$.
(Of course, if we're linearizing, we project onto the first term in both of those.)