Is it safe to heat active dry yeast to make a substitute for nutritional yeast?

Right, so, there are basically 2 ways of killing micro-organisms: chemistry and heat, and heat can be divided in moist heat and dry heat. Dry heat is more straightforward, although generally less efficient in killing things than moist heat (and also not appropriate for lots of surfaces, etc.)

Now onwards to your questions:

1 - Sterilization efficiency depends mainly on a few parameters: contact surface (meaning that the more your surface is in contact with the heat, the better), contact time x temperature (so, if you use lower temperatures, you need more time to kill everything). For practical applications you should a) spread your yeast on the largest surface available with the thinnest layer possible to maximize your contact surface and b) be patient and let it toast well - I don't know the temperature, but it should stay for at least 5 minutes in order to have everything killed

2 - Botulism is caused by Chlostridium botulinum which is a bacteria that sprouts in low-oxygen moist environments and when it sprouts, it releases the toxin that causes botulism. Dry active yeast is a fungus called Saccharomyces cerevisae and they need medium to high oxygen environment to grow and be viable, and they usually out-compete bacteria, to the point of being used to treat bacterial diarrhea so it is very very improbable that your package of active dry yeast will be contaminated with Chlostridium spp and that it will be able to sprout while you handle it. Bottomline: it is safe.

3 - Yes. And also it is the most viable option if you want to just buy it and kill it later (both for price and reliability).