It says return damage is ^2, not *2. Which iirc means that Counter, for example, is 1.5*1.5 = 2.25.
Are you sure you're not thinking of:
<Pwnemon> i think red got his idea
<Pwnemon> from an old ruling about non-damaging moves
<Pwnemon> where when they were comboed with themselves, the effect was simply doubled
?
But IRC seemed unsure but leaning to *2.25. At least that's how I read it.
EDIT: Although I'm happy to take the 3080 damage from using the Damage^2 calc.