Take an angle grinder to it and fashion a sharp edge at the battery compartment, then throw it at the balloon.
Seriously though this info could be found in five minutes of searching this forum. Use google and type site:laserpointerforums.com [what you are trying to search here]
Contrary to popular belief it can be done. Take a needle, this will be important and tape it to the tip of your Laser. Be sure you are close enough to the balloon.
Quickly jab at the balloon. If you've properly modified your 5mW laser, you should hear a satisfying "Pop".
Probably not. While a true 5 mW laser can pop a balloon when focused, the output of generic laser pointers is closer to around 0.5 mW or so. At least that's what I've heard.