Thank you all for participating in this discussion 🙂
After a few days of research and observations, I now present my opinion on this:
1 - Why do batteries expand?
Batteries are made up of multiple cells. It is actually the cells that expand. The reasons are overheating, fast/overcharging and too much strain on the batteries. In my case, my battery expands when I charge it or my computer heats up. The outside temperature here is around 40 C. The battery tries to return to the normal size (shrinks) when it is discharging or is relatively cool. When I wake up my computer in the morning, the trackpad behaves fine and clicks are perfect.
2 - Are expanding batteries dangerous?
Yes, they are potentially dangerous to you as well as your computer. Li-ion-polymer batteries may leak or explode after a certain threshold. In other words, once safe limits for temperature, over-voltage/current and physical expansion are crossed, the battery is like a time-bomb. The battery may combust releasing toxic fumes. (Watch youtube videos)
3 - Is it normal for batteries to expand?
No. If the battery is used 'normally', then it should not expand. If the battery is expanding even though proper guidelines for usage are followed, then there is something wrong with the chemical composition of the battery, probably due to a manufacturing defect or due to its age.
4 - What does Apple do in this case?
Apple considers batteries amongst 'consumables' and does not provide any replacements after the 1 year limited warranty (or after AppleCare expires). The battery has instructions printed on it which ask you to replace the battery in case it is leaking/expanding/swollen/physically deformed.
5 - Then how did some guys get free replacements?
There was a batch of MacBook/Pros which were shipped with defective batteries, and consumers experienced problems quite soon. So Apple had a replacement program for these models (ended in early 2008). Apart from this if you got a replacement, then it was mere luck. When a consumer walks to a busy, crowded Apple Store flashing a defective, dangerous battery in his hand, it is best for the Geniuses to replace it without arguing 😀.
6 - What should I do?
Talk in person with a Genius. If it doesn't work, try another store. If nothing works, buy a new battery and safely dispose off the old one.