I am looking to isolate an inverter when power from a generator is applied- debounce relay?
I believe that what you might really need is a changeover contact then neither grid/AC nor inverter output can be connected together. When AC resumes the relay, in sequence, disconnects the inverter and milli seconds later reconnects the AC to the load.

There may also be another problem that you haven't considered and that is when you disconnect the inverter output when it's supplying a high current to the load. This may cause some back emf (due to the inverter output filter) and this may "hurt" the inverter.

Anyway, it's worth trying the changeover relay and if it still gives problems then you'll have to find a way of ramping down the inverter output voltage to a safe level before disconecting and reconnecting the AC.