t43562,
whether the Hydrogen can absorb all the heat
It can. It's a question of managing that process.
Also not something you want to have within many many miles of a city
No indeed, you'd want it just as far from a city as the launch site. Kerosene is not the most explosive material. I understand that hundreds of tons is often to be found traveling over major cities on a minute by minute basis.
The great thing about SpaceX is that they've spotted that the booster returns 20 times lighter than it departed, which makes it a rather less threatening object on the way down than on the way up.
The sales material might boast an impressive mass margin, but in reality, it's worrying. The structure to hold all that hydrogen is large, and needs to cope with quite some dynamic pressure on ascent.
Good luck to them, but as time marches on, I suspect they're going to need it.