I just came across this thread. Awesome video. But the explosion wasn't actually the airbag. It was the water reacting with the burning magnesium in the engine block. Burning magnesium reacts violently with water. You can see the bright white flame coming out from the explosion, that's the magnesium.
I've actually had this happen to me personally. Pontiac Fiero's had magnesium in the engine as well, which was the kind of car it was. Scared the shit out of me for a couple seconds when white flame was raining down on us.