Update: It worked quite well, and shrinkage was significant. A fairly full balloon went down to empty. That being said I think some kind of "balloon clamp" would be good to add for peace of mind. I think all the seals were good but it's possible there could have been a slow leak.
Also it was...
I ferment in a plastic bucket primary only so the air space is considerable. I think you're right that the water density change is minimal, but if you have few litres of air then there will be... Shrinkage
I was looking for a way to avoid suck-back and oxidation when cold-crashing. I heard some people use a balloon, so I built this thingy. Balloon will be filled with co2 of course. I'm kinda proud of this device so I thought I'd share.