I guess the problem is that saying "tensor products are spaces of multilinear functions on vector spaces" is tantamount to saying "vector spaces are spaces of multilinear functions on vector spaces", which is simply not true: the second set is strictly smaller than the first. For example, there is no space of linear functions on a vector space which is countably-infinite dimensional: they are all either finite-dimensional or countably infinite dimensional. Said another way, if we're talking about 1-fold tensor products, it is not right to say "a 1-fold tensor product of V is V*", since V itself is a perfectly fine 1-fold tensor product.

In order to have V* = V for an infinite-dimensional vector space V, you need to redefine V^* to some kind of restricted dual, rather than defining it as the set of all linear functions. In the polynomial example, if we take the space of all linear maps g: F[x] -> F such that g(x^n) = g(x^(n+1)) = ... = 0 for some n >> 0, then this restricted dual is isomorphic to F[x] again. But the evaluation map g(f) = f(1) is not in this restricted dual.

There are more reasons why confusing a vector space with its dual is a bad idea. For example you cannot cook up a map V -> V* without extra knowledge, for example a choice of basis of V or something. There are many examples in abstract algebra where there is a perfectly good vector space V, and absolutely no good choice of basis for V, so trying to identify elements of V with V* is unnatural. We may still be able to speak perfectly well of vectors in V or V*, but trying to identify V with V* is still unnatural. A good example is V = (functions R -> R). I can speak easily of elements of V (for example, x + sin(x)), and of elements of V* (for example, f -> integral of xf(x)), but trying to figure out which element in the dual either of these corresponds to is hopeless. We're better off just accepting at some point that there is a real difference between a vector space and its dual.