They get a little gassy when ya over heat em. AS long as its spongy like air and not solid when ya squeeze it the cell is Ok but probably degraded a bit from the stress. If it is swollen like that and there is resistance then the cell is puffed and that's not good. Do NOT however try and relieve the gas inside.. that would also result in bad. Keep an eye on it to make sure the cells are coming up balanced and not more then .02 off between them on final charge. If they come down and are more then .05 off between cells I would retire it.
Yes it is puffed but not too bad at this time. I suggest that you stick it in the refrigerator for an hour of so and then test it again. I will almost guarantee that the internal pressure will lessen significantly.
Heat is what makes them puff and after losing all of my batteries, (except one), because of puffing and high internal resistance I began refrigerating my batteries before and after charging as well as storing them in a refrigerator. The one which survived was puffed but not too bad and its capacity had dropped significantly. Since refrigerating my batteries I have not had a single battery puff even slightly and the puffed battery actually regained some capacity and its internal resistance has actually decreased a little.
Keep them cool, (NOT FROZEN), and puffing should be a thing of the past or the distant future!
Just a different method of getting the same result!
I use a battery cell voltage checker with alarm and it is set for 3.4V per cell.
When flying with the motor running the battery voltage does sag a little due to its internal resistance. After much experimentation I discovered that if I stop the motor the moment it reaches 3.4V the battery voltage will recover to 3.7V just running the Rx and servos.
It means that I do a lot of dead stick landings but I never run a battery too low and thereby cause it any damage.