1) That's not a dumb question - you can have lots of fun with mains failure
when you bring the neutral close to the "ground".

2) Provided your circuit operates from the live and neutral ONLY, you may
attach the neutral to the 0V (ground) - unless of course some dumb idiot
wire the power to you with the live and neutral swapped - do first check that.

3) Use an isolating 1:1 transformer - but if you do this you might as well
use the supply transformer (if you have one).

4) I once got my 50Hz timing info by wrapping a wire around a fluorescent
light and taking the SINGLE wire into the PIC. I made a digital (wall) watch
that hasn't lost a 1/50th of second in 5 years. PS. To see how little
current you need to switch a PIC input, take a window device, run a program
that waits in a loop for a pin to go high, then low, before toggling another
pin and see how the period varies as you vary the amount of light let in
through the window.

Hope this helps.

Jan van der Watt
[I went to ACTIVE-WORLDS and virtually stayed there]