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"the company is recalling every one of those drones because their batteries pose a fire hazard." and then "you’ll need to return the entire drone, minus the batteries. You’ll need to find a safe way to dispose of the batteries yourself"

.. WTF? "we want all but the dangerous bit back"

What delivery company is going to want to transport lithium batteries that you're shipping back because they are a fire hazard above and beyond the usual fire risk lithium batteries already present?

Makes total sense to me that posting or couriering faulty Li-* batteries isn't something a responsible company would encourage.

UPS lost a 747 over Dubai due to a Li battery fire, the delivery industry got a lotttt more careful about Li batteries after that.

This.

Why don't you just dispose of the battery yourself, and snap send you a new battery? And you keep the drone?

It's probably not an issue with the batteries themselves but an issue with the battery management system.
"Yes, the entire drone is being recalled, not just the removable battery, likely because Snap doesn’t make those batteries anymore."
The product was killed off due to being a failure ~2 years back. Presumably they don't want to manufacturer an alternative battery/alternative charger circuit and figure most people probably won't bother returning the drone as they forgot about it anyways so are just offering a full refund to anyone who remembers theirs even exists and is willing to mail it in as proof.

OTOH they almost certainly don't want a bunch of defective batteries coming in the mail when the ultimate resolution they'd perform is the same as you'd perform locally.

My guess is it's not the battery but the charging system that is the issue. If it's over charging, or not discharging to storage voltage properly then the batteries will puff up and can get punctured and catch fire.
It may or may not be a requirement of the recall program to actually get the product back, whether or not it makes sense in the context of then not being possible to ship a possibly dangerous battery via any normal shipping method.
I don't even use the app, but I wanted one these just play around with.