One way or another, you really should have isolation between the power line and any user-touchable parts. The user-touchable parts would be the PC if the micro communicates with the PC, which then logs the data, displays it to users, etc. If this is a stand-alone meter, then all the user-touchable parts can simply be plastic, which insulate the user from the non-isolated signals inside.
Either way, the simplest and most accurate way for the micro to measure the AC signal is to have the signal connected to the micro thru a resistor network. That means the micro is not isolated, or you can say it is on the "hot" side. If this unit has to have external connections, then you can isolate those using opto-isolators.
The advantage of this scheme is that the analog signal is directly connected, and the digital signal is isolated. Isolating digital signals is easier and can be done reliably without data loss or adding inaccuracies to the transmitted information.