Never an issue- you have two electrical systems, one AC and one DC. The AC is grounded to the engine... even if you rubber mount the engine, the chain connects it to the frame of the bicycle electrically as well as physically, so forget about isolating the AC of the magneto. Your negative for headlight, tail light and brakelight all congregate on the negative DC hookup of the hotbox... or the 6 volt battery system should you choose to run one (more on that later). Your positive output goes to head and tail positive and to one post of the brakelight switch (next transmission), the other of the brakelight switch posts to the light in question.
I figure the more I explain this system, the less likey somebody is to mess it up and the less frustrations encountered. Anybody else feel they're out in left field, pipe up and I will guide you home.
BTW- 4 1.5 volt "AA" batteries of the rechargeable variety seem quite capable of powering the lights with the hotbox as a tricklecharger... I will have to see if the hotbox can harm the batteries...