Yes, the lungs do "inflate" slightly, but not like blowing up a balloon. I just butchered another deer yesterday and looked it over very carefully in relation to this diagram.
When the front leg is positioned in a standing position, the elbow is slightly higher, coming about an inch over the bottom of the inside of the chest. The shoulder blade tops out at the spine, and lays back at a little more angle, covering more of the top front of the lungs. There is very, very little chest cavity forward of the front leg or the heart - this is where the esophagus and trachea enter, with the trachea branching to each lung, though not "lung" a solid hit in this area is usually fatal, the problem is there's a lot of muscle and bone around it - brisket, collarbone, upper leg and shoulder, short stout ribs, that protect the area well. Also, the extreme rear of the lungs is a thin lobe that lays along the diaphram and a deer hit there will often go a long ways and live for hours - I've done it more than once.
This is still a good aid, just keep in mind that it may vary from real deer depending on animal size and local body variations. Like someone said early - "shoot them in the center of the chest." If you shot every deer from a broadside angle straight up from the elbow about 1/3 of the way up the body, you would have lots of short blood trails. On treestand shots or angled away deer, shoot for the off-side elbow.