Getting the clean AC to the µC is the hard part, then, once you get the AC to the µC ADC with the proper offset you should just sample it and do the math there, you don't even need to porvide enough bandwidth for the signal, I successfully build an audio vumeter with an arduino (9kSa/s max?) with decent response well over 20kHz.
As said a transformer would be nice but then you have the problem of the linearity of the transformer. Other way would be to make a capacitive divider and a transformer to provide isolation, but then you need to characterize the caps, the transformer and the interaction between them.
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