I've heard of the poultices and it makes sense that something like that (especially in physical contact with the sick person) would have properties that heal. The fumes make mucus and phlegm easier to expel, thereby removing them from the system.
I just have a hard time buying the notion that onions are 'germ/disease magnets'. If that were the case, I think we'd see cut onions in every sickroom. But, if you think it works, go for it. I'll pass on this one.