Not a free-spinning motor, but a stalled one with the shaft held still.
I fly RC electric and slime stunt, but I've heard of this phenomenon. Besides, I design circuits like this for a living. To prevent something like this happening, the ESC designer has to go out of their way to detect the stalled condition (or the over-current condition) and shut down the motor. AFAIK, most ESCs don't do this well (I know this through hearsay -- take it with a grain of salt). I think the assumption is that they only need to last long enough for the pilot to slap the throttle stick to 'off', since they're assuming an RC pilot is in visual contact with the plane.
(Note, too, that this is one of the cool features of the Kieth Renicle timer -- he detects the stall and shuts off the signal to the ESC, preventing all this excitement).
If the battery isn't puffed up it's probably OK. I'd charge it up, paying extra attention to the "don't let your battery catch the world on fire" rule, check for puffing, and if my charger will do so, discharge it to 3.7V/cell (or maybe 3.
and see what sort of capacity it has. Then I'd check for puffing
again, charge it up, make one last check for puffing, and then maybe I'd leave it in a spot where it could burst into flame without burning down my house. I'm probably being extra-paranoid, but, one does hear horror stories about torched batteries. I think I'd also mark it somehow so I know that it's the 'one', so that if it dies an early death I'll know why.
There's a small chance that as the ESC died it exposed the timer to too much voltage. There's a lot of things in the way of that in a normal ESC circuit, but on the other hand there's a lot of random hot things and molten solder rolling around, too. If you have another ESC and motor, you're not going to hurt it by plugging the timer in and giving it a whirl. Better yet, if you have a way to hook it up to a servo and watch it work that would be a good test.