I just tried this circuit out on a 15V AC transformer I had lying around. This is going to be similar to your 24V AC device.
You could use a bridge rectifier (as I did: W02M) or 4 x diodes to rectify for the opto-isolator. The 2K resistance (in total) would reduce the current to around 12 mA which is about right for the device. That completely isolates your Arduino from the appliance. Then on the other side the opto-isolator turns on when the current flows, driving the output low. The capacitor is there to smooth out the AC signal so it just looks like an on/off situation, not on/off 50 or 60 times a second.
Note that the output (to Arduino) is low when the device is on, and high when the device is off.
You could probably eliminate three of the diodes because half-way rectification would be adequate in this case.