Reading voltage from transformerless power supply (Kill-a-watt)

Maybe you should look into isolation transformers: ToddFun.com » Blog Archive » Isolation Transformers

That way you gain some protection while working with the circuit. However, as soon as you hook up any device that is grounded (PC, scope...) that protection is GONE.

And having the arduino connected to your PC while another part of it is connected to mains without any form of isolation barrier is not a good idea at all.

--> code code code ... upload new firmware ... disconnect from PC ... connect to kill-a-user ... test ... disconnect ... repeat

Google for "AVR465". Maybe it will give you some inspiration.