Shunt Current measurement isolation problem
Yes, this will be a problem. Unless there is galvanic isolation between the "earthed" controller and the op-amp there will be instant smoke. The 3.3 volt supply (and its 0 volts) also need to be galvanically isolated from any electrical connection to the "earthed" controller.

Remember that live and neutral are not floating above earth - neutral is usually earthed and this means "live" rises and falls around earth at hundreds of volts peak to peak.


  Do i need op-amp with higher common mode voltage rating ( greater than
  120 VAC)


The input common mode range of an op-amp is largely determined by its supply rails and so to achieve +/- 170 volts (peak) you would need to find a supply with very large power rail capabilities. However, you would still have a safety problem feeding the op-amp output to the controller - you ought to consider using either a CT (current transformer) or something like ADI's range of digital isolation products (typically ADuM5401 and an ADC): -



The ADuM5401 provides kV of isolation but, remember, when working on anything that connects to live voltages, death or injury are just around the corner for those who are not wary and careful.