The whole hydrogen producing thing from batteries is HIGHLY exaggerated. Hydrogen is only produced externally when the batteries are overcharged. Consider this, the battery requires water to stay functioning. If the battery converted that water to hydrogen and it leaked out every time it charged then the battery wouldn't last long because it would dry out.
The hydrogen warning is there for legal reasons , just like alkaline batteries say they will explode, and lithium batteries have a fire and explosion warning.
To the OP, the UPS will not care about the new capacity unless you calibrate it for the new battery. You need to read up on your model to find out how to do the new battery calibration.