If I obtain the iron core from a microwave oven transformer and strip off all the windings then wind 2 coils, each being 20 turns with 12 gauge wire, will I effectively have made an isolation transformer?
Yes. However, as the core of a typical microwave transformer runs at a maximum of about 1 volt per turn, it's only good for up to 20V AC.
Can I use it with household power without tripping the circuit breaker?
No. It's only good for a maximum of 20v AC.
What do I need to do to make sure to not trip the circuit breaker?
Only strip the HT winding, and the magnetic shunts, and leave the mains winding intact. The mains winding is intended for mains. Then wind your new secondary within the vacated space. You'll need approximately 1 turn per volt. If you want mains-level voltage out, you'll need 115 or 240 turns, maybe a few more. You can measure the volts/turn with a few test turns on the secondary, with the primary energised.
This is quite a popular way to make a DIY spot-welding transformer. With 5 turns of very thick wire on the secondary, you'll have a 5v 200A transformer.