Continuing to use a swollen or bulging Lithium battery is not safe. You should take it in to Apple and ask them if there is anything they can do. At the least, they can safely dispose of it for you. Apple can replace the battery for a fee.
Lithium itself is quite toxic so you don't want to handle the battery if it ruptures. Swollen batteries are also at risk of internal shorting and possible sparking a fire. Turn the Phone off, stop using it and get the battery replaced.