The hydrazine fuel commonly used as propellants in satellite positioning thrusters is toxic, but on exposure to air it quickly breaks down into harmless compounds. Water also breaks it down, but this takes longer.
The relatively small quantity of fuel remaining on this satellite, the unlikelihood of its container surviving re-entry intact, and the negligible threat to human health that its release into the atmosphere would represent, strongly suggest that its destruction was merely a pretext for this exercise, as paulr says.