Finding minimum spanning tree of a special form graph
That recursive algorithm is wrong, although it was an interesting attempt to improve established algorithms on specialized graphs.

Here is a counterexample with $n=3$. 



The graph above was drawn at https://graphonline.ru/en

All edges weigh 2 except that the rightmost two edges, $(v0,v3)$ and $(v2,v3)$ weigh 1. The recursive algorithm will pick only one edge from the rightmost two edges while an MST must include both of them.

By the way, I cannot understand clearly the description of the algorithm in the case of $n=1$ and in the case of $n=2$. Fortunately (or unfortunately), that does not affect this answer since the counterexample depends only on the "else" branch of the algorithm, which is described clearly.