BvU said:
The second argument of ##\mathcal L## is ##v_i\quad ## So for the second ##\mathcal L\ ## : $$ {\partial \mathcal L \over \partial x_i} = {\partial \mathcal L \over \partial v_i} \; {\partial v_i \over \partial x_i} = {1\over \epsilon} {\partial \mathcal L \over \partial v_i} $$
This is misleading since by assumption the ##x_i## and ##v_i## are independent variables, concerning the partial derivatives of the Lagrangian. What's behind this is of course the action principle, which is about variations of the action functional
$$S[x_i]=\int_{t_1}^{t_2} \mathrm{d} t L(x_i,\dot{x}_i).$$
The variation of the trajectories ##x_i(t)## is taken at fixed boundaries ##\delta x_i(t_1)=\delta x_i(t_2)=0## and time is not varied. The latter implies that
$$\delta \dot{x}_i=\frac{\mathrm{d}}{\mathrm{d} t} \delta x_i$$
and thus
$$\delta S[x_i]= \int_{t_1}^{t_2} \left [\delta x_i \frac{\partial L}{\partial x_i} + \frac{\mathrm{d} \delta x_i}{\mathrm{d} t} \frac{\partial L}{\partial \dot{x}_i} \right ] = \int_{t_1}^{t_2} \delta x_i \left [\frac{\partial L}{\partial x_i} - \frac{\mathrm{d}}{\mathrm{d} t} \frac{\partial L}{\partial \dot{x}_i} \right ] \stackrel{!}{=}0.$$
In the last step, I've integrated the 2nd term by parts. Since this equation must hold for all ##\delta x_i##, you get to the Euler-Lagrange equations,
$$\frac{\delta S}{\delta x}=\frac{\partial L}{\partial x_i} - \frac{\mathrm{d}}{\mathrm{d} t} \frac{\partial L}{\partial \dot{x}_i} \stackrel{!}{=}0,$$
which are the equations of motion for the trajectories ##x_i(t)##.