Now I have never seen this done but talked to the old guy who has done it and I work with his grandson and have heard the stories from a few people I trust. He has mig welded a gas tank while leaking gas. The old dude says that if a car came in with a hole in the tank he would fill it with gas and then weld it while leaking, to me thats being careless and I wouldnt do it. 99.9% of the time nothing blows up just gets a flash and a littel bigger when it gets to the gas, to blow up it has to be a tank without a vent that gets so hot from the fire it blows up, a plastic jug will most of the time just melt and flare up when the gas leaks out.
You are right about fumes but Brian (sydwayz) is a pretty smart guy and I trust he wont blow himself up.