Is bicycling for transportation safe?
Absolutely! 
Here's an excellent article detailing the fact that regular cycling adds more years to your life than the risk of accidents would reduce:
http://davesbikeblog.blogspot.com/2008/04/cyclists-live-longer.html

The fact is that riding in a car is at best a little safer than cycling, and at worst a little more dangerous than cycling depending on the statistics that you choose to believe.
There is no doubt however that consistent, moderate exercise increases your overall lifespan, and makes you more able to enjoy those years with good health.