It would be kinda okay-ish for most people, but as a (mostly) nonpopping looner, I take balloon durability/stability pretty seriously.
The main problem with having a balloon be a toy insert in a cereal box is the fact that there really isn't a good way to keep the cereal bag from rubbing against or squishing the balloon too much (outside of having a rigid partition inside the box to seperate the balloon from everything else). Balloons, even when uninflated, don't respond well to being rubbed with coarse or rigid objects (like a bag full of cereal) or being squished for too long a period of time. Too much coarse friction causes micro tears in the balloon's latex (which makes the balloon far more unstable when inflated), and being squished too much can make the balloon's latex stick to itself (which often flat out ruins the balloon completely). The usual cereal toy packing methods leave the balloon extremely vulnerable to both these things, which would result in a lot of dud balloons (and even the balloons that survived would be pretty compromised).