The main safety issue is one of energy density, me thinks. It just isn't very bright to have 50kw (grabbing numbers) in a small device that is sensitive to, say, earthquakes. That is a lot of energy to control during during catastrophic destruction. I think part of the key to the safety issue is to have many smaller flywheels in an array where each flywheel is physically separated, and unlikely to cause a chain reaction.
Another option to examine is the merits of engineering in a fail-safe braking system (e.g. a 50kw electrical load) that could safely take some/most/all of the energy quickly. When a seismometer detects a large enough quake (or vibrations/heat indicating bearing failure), say 3.2 Richter, it hits the "brakes" and begins to turn motion into electricity to power this "braking" load. Wasting the stored energy in such a manner is better than risk of loss of the flywheel itself. This would essentially use the UPS-type design as an emergency braking system for a long-term storage design (for values of long-term approaching 14 hours).
Mark