You could be over-thinking it. We're jsut using the first derivative t approximate the curve over a small displacement.

Your first point (0,1)

Your second point (0+0.25, 1+What?)

We have dy/dx = x - y^2 ==> 0 - 1^2 = -1

y-displacement is -1*0.25 = -0.25

Your second point (0+0.25, 1 - 0.25) = (0.25, 0.75)

Now you have a second point. Calculate the slope there and find the third point.