3VAC on coil side of relay. What's going on?

You should not be measuring the voltage between the arduino ground and the mains, it is a meaningless value you will get because they are floating with respect to each other.

You will get about 6V between the mains neutral and ground and you can use that voltage for free, it does not get metered. Although you will possibly get put in prison if the electricity company catch you doing it.

Any LED with a resistor wired across the coil will show when the relay is on.