Using a ferroresonant regulating transformer as an isolation transformer
It will work, and there shouldn't be any safety issues.

Just be aware:


Ferroresonant transformers are horribly inefficient, so the input power will be considerably higher than the output power. (i.e., they get hot!)
The output waveform is more like a square wave than a sine wave.
The input power factor is horrendous.


These characteristics occur because the core is deliberately driven into saturation by the resonant winding in order to get the voltage-regulating effect.