Is this a good district for finding local eateries and shops? And for staying? I don't know Venice and what areas are safe at night. There's a cheap ("cheap") hotel on Calle Gallion (Al Gallion) but is it a far walk from major sights like the Rialto Market and Duomo? Will it be difficult or long walking to the water bus to Murano Island?
I can't think of a sestiere in Venezia that isn't safe at night or day. The biggest risk you run is tripping on a bridge step in the dark. Criminals don't like to operate in it because it's not that easy to get out of there quickly and there are hidden surveillance cameras everywhere. Also the place is so full of people walking around at any time of day and night that it's not that easy to commit crimes and get away with it. Calle Gallion is a good location and it's a short walk to the vaporettos running along the Grand Canal. You can take the one that goes to Murano from there (no you can't walk to Murano, unless swimming a long distance inside the Lagoon is your cup of tea). Venice is not that big, you can walk to any place of interest (San Marco, Rialto, Accademia, Frari) from your hotel in 20-25 minutes top. If you get tired of walking, you can always reach the Grand Canal and take a vaporetto (ferry bus). If you don't know Venice, I'll show you a day there to get familiar with it. Enjoy the video: http://vimeo.com/40977797