You must be one of the most misinformed people in the world. Or you make this stuff up. It is not illegal. If it were illegal you could not take a computer, tablet, electronic game or any cell phone on any airplane. And what about the flight crew, who all now have iPads? Is it illegal for them to have those iPads that have their flight plans and charts on them? And remember that all modern airplanes have Lithium batteries as backup power. NO ONE has died from any confluence of events. Altitude, pressure and radiation are also irrelevant, and you apparently don't know what "critical mass" actually means. The only point where you are partially correct is that airlines now do not permit Lithium batteries to be transported as cargo on passenger airplanes, out of an "abundance of caution," because ONE caught fire 4 years ago, and a pallet of batteries that was dropped from a height of 50 feet caught fire ON THE RAMP (not in a plane) 16 years ago. Lithium batteries can still be transported on cargo flights. Otherwise, how do you think iPhones get from China to you? On tramp steamers? They can be carried in the passenger cabin, and they can be contained in portable electronic devices. Because if one does catch fire in the cabin it can be detected and dealt with. Even this has only happened once of the past 10 years. Out of approximately 50,000 flights per day worldwide. That's roughly 183 MILLION flight in 10 years, and one incident.
You will also notice that the battery pictured above DID NOT catch fire. It expanded. As it was designed to do at end of life. Apple makes safe batteries. Putting a "brand X" battery in your iPhone does not guarantee that it will be safe, however. And the battery that expanded was badly abused; allowed to remain in a discharged state for "3-4 months" per the OP.