Whoa. That means the device has a condition I don't have any experience with. I have never physically seen a Lithium-Ion battery swell before. The specification for Lithium-Ion says that the cell, when it reaches a certain temp or voltage, will trip out and stop charging. Which should be long before any kind of chemical expansion should be able to take place.
Now I want to play with it....
I have seen a Lithuim-Ion battery explode, and it's not a pretty sight, can be quite dangerous too if someone happens to be close at the time.
Several years ago I was a member of a model Radio Control Plane flying club, and every Sunday morning, we had meets for the purpose of flying our beloved Radio controlled planes...lol. Most if not all, electric model planes use High Power, special Lithium-Ion battery packs, anyway, most of the flyer's had several battery packs, so they would often recharge them using special dedicated chargers usually in the boot of their car. Anyway one Sunday at one of these events, there was an almighty bang and big plumes of smoke & flames coming from one guys car boot (which was open) when the battery pack he was charging litterally blew up. It set fire to items in the boot plus totally wrecking loads of his gear, it even blew a hole through a plywood model stand.
Needless to say his whole boot was in a right mess, the point of the story.. is, these batteries have the potential to be dangerous, though more and more safety features have now been incorporated in them, and is indeed now a strict legal requirement.
Model car and plane batteries are designed to deliver very high currents indeed, unlike the battery in our iPads, but by their chemical design, all lithium-Ion batteries have the potential to be hazardous if faulty, or if they are not charged correctly.
Thankfully, things have moved on, and due to better designed inbuilt safety & monitoring features, and smarter charging designs, lithium-ion batteries are now used everywhere, so it's very rare to hear of problems, certainly with normal domestic devices anyway.
Lithium-Ion batteries can actually be ruined by running it until there is nothing left in it's cells, however this will never happen, as devices like the iPad will shut itself off well before that level is ever reached. ie. They have a optimum minimum/maximum voltage range.
It's best to topup charge your iPad fairly frequently, but though manufacturers claim there is no memory effect with lithium-ion batteries, it's not 100% true, there is still benefits to be had by cycling a lithium-ion battery occasionally. They certainly don't have the dreaded memory effect of batteries of foregone years, but letting your ipad run down, say once every month or two and charging to full again won't do it any harm.
It's worth reading the section near the end of this artical. You may find it interesting.
Lithium-ion battery - Wikipedia, the free encyclopedia