So i looked for similar batteries and found 3.6v single cell 2400 mAh batteries from sanyo which could be a direct replacement for the batteries .
The problem with the replacement cells is that they have to be spot welded to make the complete battery..
Since i didnot have a option of doing that i made a holder for the replacemnet cells instead so that the cells could be held together to make the battery
Step 1: Tools Needed
philips head screwdriver
paper knife/ stanley knife
Step 2: Opening the Dremel
Carefully unclamp the dremel by inserting a straight screw driver on the side
Step 3: Gathering the Parts for the Holder
double sided general copper clad board
3 mm brassPCB spacers
3.6V lithium ion cells
2 mm screws..
Step 4: Making the Struts
Step 5: Making the Base and Top
drill 2 mm holes on the two edges of the boards
remove the battery board from the original batteries
solder copper plates to the copper boards to make good contact with the batteries
solder the battery board from the original batteries to the top board
finally bolt the pcb spacer struts to the boards using 2mm screws
Step 6: Putting the Holder Together
Step 7: Soldering the New Holder to the Dremel
Step 8: Assembling Back
make sure to orient the battery plate in the right orientation ...
thats all.... if the batteries are inserted in the right orientation the dremel should work....