I never used the iPhone as a hotspot, but did keep it plugged in since I use it as a iPod & to listen to NPR over the internet.
As to the Jetpack, I thought it was because of the extra heat caused by keeping it in a Sleek amplifier, however I started keeping the jetpack out of the amp except when absolutely necessary, and the same swelling occurred with the second battery.
There have been a number of complaints about the specific Jetpack (The Pantech MHS291L) and battery problems, so it might not be a problem with other devices.
