That was taken from HTS's Grimlock listing. I haven't seen any pictures showing this feature, and I would highly appreciate it if someone who owns Grimlock could take a picture of it and post. I'd imagine there must be a place to insert the tab in his mouth.
the back of the official box still has an arrow pointing to the sword that says removable fire breath, so I don't know if it's officially dropped or not. You can wedge the sword into his mouth but it tends to pull the upper jaw apart at the seam and it doesn't look that great so it's not too useful.
I don't know if it was a dropped feature or not, but it certainly was planned in the beginning. I think someone here (or YouTube) had posted pics of it with the flames coming out of his mouth.
The sword can do it, it's just a pain in the ass and it doesn't balance. I'd take a pic, but I have a hard enough time balancing it in T-rex mode as it is.
I think the sword = mouth fire gimmick is silly anyways, it looks like he's being a sword eater, but doing it wrong.