I can confirm that my original Archos 7 battery has expanded although not to the degree shown in the pictures.
I have since purchased replacement batteries from www.newmp3technology.com
and resolved my issues.
I believe that there is an issue with the Battery on the Archos 7 gaining a charge memory and recharging it before it is completly discharged leads to this condition. You can whine all you want but all batteries suffer from this.
In short, disconnect the charger as soon as it starts blinking. Don't leave it on charge overnight. This does present a problem when trying to use the DVR Station where you have to charge the Archos to use it there.
Cost of a replacement standard battery (US) $45.00
Or you can get the high capacity bettery for (US) $60.00 which I routinely get a weeks worth of play from although I can't stick it in the DVR Docking Station due to sticking out the back too much. The regular attachments work fine though.
I have saved the shell of the old battery case in case I want to make an adapter to use it on the DVR Station without wrecking another battery.