Lets see if I remember this right.
Correct me if I am wrong, it has been a year and a half since I had the DC electronics class.
On a ni-cad battery, what has happened is that the Celophane that seprates the plates in the battery have litterally melted, for the reasons that Old Virgin mentioned. That celophane acts as a barrier between the plates in the battery and the "electrolyte" in the batteries. Because that barrier is gone, the plates are free to oxdize(I know that isn't the right term. It is 2AM here OK) uncontrollably.
What do you get when you allow something to oxidize uncontrollably. Sometimes rust, but in this case your battery is in the scientific venacular......ON FIRE!!!
Like I said, I am trying to see if I remember what they where teaching a year and half ago, so if I am out in left field, don't torpedo me too harshly.
OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.