I've heard a lot about these getting stuck (I'm afraid for my fish, I have one of these heaters) but I've never heard of them becoming an electrical hazard.
Couple questions for you nicknwillys:
1. Did you have a GFCI (Ground Fault Circuit Interrupter) and if so, did it ever trip?
2. Was your heater ever removed from water while it was running or shortly after it was running? (for example, during water change.)
Due to the insulating plastic on the outside, the inside must get VERY hot. Definitely hot enough to melt the plastic shell even if its unplugged before being removed from water. That's my theory.
If your gfci didn't trip, test it by pressing the "test" button on it, and then reset it by pressing "reset."