There is nothing "nasty", it is just that Li is a reactive metal with high potential energy. But the whole point of the Li-ion battery is that the Li is bonded as LiCoOx at the cathode and the Li ions intercalate with a carbon based anode, so there is never any free reactive Li metal. These batteries have high energy density and will undergo a critical avalanche and burst into flames and explode if you for example drive a nail or a bullet through them. Try it with an old laptop battery in your backyard and wear safety goggles! (But jet fuel will also burn if you ignite it!) The electrolyte solvent is a flammable hydocarbon, which does not help things. Scientists are working on improved cathode materials that have both high enough energy density and are safe. For example, Valence (
www.valence.com) supplies its "safe" cathode Li-ion battery for the Segway. The ultimate target is HEVs or EVs. The formers requires very high discharge rates, which have been demonstrated in power tools, e.g. the high end Li-ion line launched by Milwaukee. Toyota is supposed to launch a Li-ion battery for its HEVs by 2007-8, but using conventional cathodes.
A Li metal anode rechargeable (secondary) is not used commerically as it can form dendrites, short and is potentially unstable over multiple charge/ discharge cycles. The Li-ion battery concept was invented by a fellow called Goodenough, I think, who is now a prof a UT Austin but it was commercialized by Sony and launched in 1991. The batteries that caught fire at LAX are primary batteries (like the ones you use in cameras), which have free Li metal in the anode. It is a completely different battery design and product. The US military uses quite large primary Li cells.