Yep 1:1 transformers are one of the best ways of protecting mains powered electronics.
They are usually designed to be pretty close to saturation at the rated voltage (copper is expensive) so in a overvoltage condition they indeed start clipping the waveform.
Still its not a magic pill. If some resistance + MOV doesn't fix it there could be a different problem related to common mode voltage surges. Long wires can have a lot of inductance and so sharp transients can cause all 3 wires of the mains line jump together. This won't cause a MOV to clip because the differential voltage between the wires is still ok. For isolated devices (Like a FM radio) this is not really a problem since the whole device just rides along and keeps seeing the correct differential voltage across the live and neutral. But this can become a problem when the device is connected to other things (Like a TV connected to the coax cable network). Whatever else is connected to it might not want to follow along the common mode wave, when grounds are connected there could be excessive currents flowing between the two. When the grounds are not connected a excessive common mode voltage difference might develop between the input and output of the switching PSU, eventually becoming large enough to arc over the PSU transformers insulation or the internal EMI capacitors.
In any way a isolation transformer should help but you should also take a look at the whole system as it could be as simple as adding a thick wire between two earthing points.