Yep, that's a non-isolated mains live controller. Not uncommon if the control mechanism can be built with adequate insulation. e.g. the original control board of the minilathe in the video would have been similarly non-isolated, either a fairly dumb analog TRIAC phase angle controller or an analog MOSFET PWM one. (Oddly enough the TRIAC one is preferred for minilathes as although it has worse speed regulation and poorer low speed performance, its a lot more robust and doesn't blow at the drop of a hat if you stall the lathe motor!)
Transferring analog control voltages across an isolation barrier is hard to do accurately, so is generally best avoided. The easiest option to gain safe low voltage isolated control of the above board would probably be to PWM the LED of a logic output optocoupler and filter (2nd or 3rd order) and buffer the output with a RRIO OPAMP, which would give you a signal compatible with its hall sensor input, and the opto output side and filter/buffer circuit could draw power from the same hall sensor connector.