There seemed to be two mutually exclusive options: replace the battery, or fix this one somehow.
If you're still within the warranty period, don't hesitate and get it replaced by Apple. Otherwise, read on.
Replacing is the obvious and safe way to go, and if the laptop is going to be used on battery power a lot or is still fairly recent and has retained much of its value, definitely recommended. The problem is, those batteries do not come cheap. At $130, it's worth wondering if it's worth it. Generally, in my opinion a 2007 Macbook would qualify as 'worth it'. Not this one, though - it has seen some wear and tear by the previous user, and more importantly; its next job will most likely involve a lot of sitting around on a desk, being connected to the power cable.
Then to fixing it / the symptomes.
First: why is the battery so swollen? As it turns out, Li-ion battery packs tend to get inflated with Hydrogen gas. Hydrogen gas is produced by the Li-ion compound when over- or undercharged. As with all gasses, the volume reduces when they cool off, so people have been suggesting to pop the battery in the fridge for a bit. While this may seem like a decent solution, it's quite temporary of nature - batteries tend to get warm when you charge them. Also, the moist climate of a fridge is generally not too great for electronics.
A more long-term solution would be to get rid of the Hydrogen build-up altogether. In this Youtube video, MacUtisse explains the jist: pop the packs. The procedure he details in the video is the following:
- Click the battery out of the Macbook, and unscrew the torx screws along the rim.
- Take off the aluminium cover (have a look at the video to see the direction etc)
- Take this thing outside, for ventilation purposes.
- Pop the packs with a sharp (non-metallic, to prevent sparks) object and let the gas out
- Seal the deal with electrical tape (or some other thin but strong and air-tight tape)
- Screw the cover back on and click it back into your Macbook
- Hydrogen gas is very, very flamable! Don't try this anywhere near open fire or sparks - taking it outside would be a good starter.
- Use a non-metallic poking device (a sharpened piece of hardwood). When using metal, like a cutter, you will induce a spark. After some effort I managed to pop the first one with wood and it deflated cleanly. On the second and third ones I couldn't manage to get through with wood, so I used a cutter sideways (as detailed in the video). It caused a minor spark. On one of the bottom cells, I poked a hole in it from the side with a needle (as it was quite hard to reach), and it actually burned up the Hydrogen. Definitely not something I would do again!
- It's all glued together quite firmly, so be careful not to rip anything apart if you decide to seperate the packs. I personally didn't, and left the two unreachable packs inflated. This one is down to your judgement.
In general, I feel confident about the symptome cure. I realise it does not permanently solve the issue, but I hope to get another year out of this battery this way. I tried charging it, and it worked fine. Then I stress-tested the laptop, and it still worked fine.