Was this pool sand or some other sand? Pool sand is specifically designed NOT to compact. It has to be.... how else would it allow water to flow through it in its designed application- a pool filter? I can see play sand or a lot of the finer sands compacting.
There's a link floating around here somewhere (that I can't find) that shows those gas pockets really aren't that harmful to fish. I can't remember the exact chemical process, but basically once the gas hits oxygenated water, it's not harmful.
I'll admit that since it was a while ago (25+ years), I can't remember. All I do remember is that it was a fine grade of sand. The pool sand I have seen seemed to be of a finer grades and I knew fine grades to be bad. But I've had people here inform me that coarser grades exist. It could be that the people telling that they're showing me pool sand could have been something else entirely.
If pool sand does have something about it that keeps it from compacting, then there should be no problem. I'm no expert on pool sand, I'll have to investigate this further. I may be wrong about pool sand and I will always admit when I am wrong. God knows, I'm not perfect. What you are saying makes a lot of sense.
As far as the Hydrogen Sulfide being deadly to fish, I'll have to investigate this further. When this happened to my friend, all I could clearly remember was the awful smell involved and the fish dying. At the time, the information I got indicated that hydrogen sulfide gas was the culprit. Things have progressed since then and more information is now available. Getting information at that time was not as easy as it is today.
Since I'm getting so many contrary reports here, that initial assessment may have been wrong. If what you are saying is true and hydrogen sulfide gas is neutralized by oxygenated water, then maybe it was something else. There are other toxins that can get into an aquarium. I'm going to investigate this and I'll let you know what I find out. If I'm wrong, I'll come back and state that clearly.
The only thing I do know for sure is that hydrogen sulfide gas is deadly. There are verified reports of its release from some pools that resulted in the death of humans and animals. But that probably was not well oxygenated water either.
Scientists believe that a massive release of this gas from the seabed was responsible for at least one of the earliest mass extinctions in the earth's history.
Prior to this, these are the only cases I had been familiar with in relation to this gas. Like I said, I'll go read more.