Dysfunctional trackpad on 2007 Macbook

I have a 2007 white Macbook here, of which the trackpad gradually became less responsive to the point where you can't press it down anymore at all. Neither the left nor the right button will physically come down, and it's not making the clicking noise either.

When taken apart right to the point where the top case comes off, it suddenly worked again. Sure, the macbook was still off, but one could click it.

Then I started to re-assemble the thing again, and kept checking when it lost functionality. Turns out right at the very last step, when the battery was popped back in, it got stuck.

Upon closer inspection the cause is completely logical: the Li-ion battery pack was quite swollen, and was literally pressing up against the trackpad.

My question now is fairly simple: what should I do? What are my options?

Your best option is to replace the battery. They are $129 at apple. My wife's 17in MBP had the same problem, noticed that her battery was swollen as well. As soon as we changed the battery, the laptop behaved properly again.