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Todays batteries are holding more amps in a smaller package.
LiPo vs others.
Before deciding if we should try to salvage or just replace this dead battery, we need to do a through evaluation and inspection.
Recharge
Most batteries can be rechared atleast once.
Dead Battery Disposal
Easy Method
Check with your local battery store. Many of these businesses can dispose of them for free. You can also ask other operators are you local flying locations. Maybe they can take care of them for you or give you a place that can. I have even seen the local municipality collect and dispose of all batteries themselves.
DIY Disposal
The first task is to drain the battery to 0V as Lithium polymer batteries are safe if carrying no voltage then you need to ensure no more charge can build up, the following will guide you through it.
Grab a bucket of sand and place it outside with the battery inside.
Connect an led or small lamp to the battery and drain it completely, leave connected for 1 day after the led stops glowing.
Cut the connectors off the battery.
Strip the wires
Join the red and black wires to create a short circuit and prevent any build up of voltage.
LiPo Battery successfully stabilized, and you can safely put it in the regular trash.
A slow discharge produces less heat and is much safer then draining the battery fast with a motor or high load connection.
Other Dead Battery Options
There are other ways that some people will discharge and dispose of their dead battery. For safety concerns for you and others, I will not and cannot speak of them here. Some of these methods can be exciting but could lead to a hard lession in electical sciense. The above methods are the only methods that I practice myself.
Always be safe when dealing with any dead batteries and always do so outside at a safe location.