what's safe to eat?

A topic search will turn up lots of opinions on this, but mostly boil down to "don't worry about it". Use common sense, look around for signs of obvious contamination, and then enjoy. I feel safer eating on the street than in many hotel buffets. Watch for a street vendor with a good crowd and where somebody other than the cook handles the money and you will be just fine. After all, they are cooking for their neighbors and word would spread pretty fast if they were making people sick.

Honestly, Mexicans don't really eat salad, so you don't really need to worry about that. If you do see a salad on a menu, you will be in a place like Sanborns or another established, mid- to upper-scale restaurant in which it is safe to eat. The exception is when you eat at cheap places (fondas) and they put lettuce on top of tostadas or sopes or a few other dishes.

I understand your reasoning about fried foods being safer to eat. Everyone says the problem with fried food is that the oil can be rancid, but I don't know if I would recognize bad oil anyway. Also, I avoid eating food that is prepared on a busy street because of the fine particles of pollution that must settle into the oil, etc.

I feel comfortable ordering fruit if it has been cut right there in front of me. I am also comfortable ordering grilled corn on the cob and licuados (milkshakes). Heck, I order quesadillas and sopes all the time on the street, too, but not everyone does. I tend to avoid pre-cut fruit that's already been bagged or corn that's off the cob (in its own juices with spices - I always forget what it's called).

Of course street vendors do not have access to running water to wash hands. If I'm going to a new vendor, I stand back before ordering food to see how they handle money. Many take money and make change, then go right back to slapping tortilla dough. Others are bit more sanitary and have a glove or piece of plastic with which they touch the money. Look for established street vendors - that is, permanent stands that they close up at night, not the guys walking around with little carts.

I eat on the street all the time, though usually from the same set of street vendors. However, I don't tend to get sick when abroad. Know your own limitations.

*** Eat at busy stands where Mexicans are eating.

The food in the Yucatan, especially in Merida, is great and I generally eat about everything- including a lot of street vendor food, raw vegetables, and salads. I rarely have any stomach problems from what I eat. I've noticed that the last couple of times I've gotten "Montezuma's Revenge" I had eaten seafood or fish. However, since seafood is so good and usually fresh, I wouldn't miss the chance to try some. Just make sure it's well prepared- preferably fried! I would generally stay away from ceviche, which is made with raw or partially-cooked seafood. I really don't like it very much anyway, so it isn't hard for me.

I think guidebooks err on the side of caution when they warn you against things like buying sliced fruit from vendors in the street. To me, that's being neurotically sanitary. Don't stress out over it, odds are you won't have any problem. If you do, Pepto Bismol is readily available. In fact, some people starting a "Pepto regimen" a few days before your trip as a preventive measure.

We eat from street vendors.
We like to buy from the busy ones, where the most locals are eating.
We avoid eating late in the day after a stall has been set up all day in the market and the food may have spoiled by now without refrigeration.
I used to avoid ice cubes and lettuce. I don't any more.
We drink bottled water, brush teeth with bottled water, and the hardest is keeping mouth closed in the shower.
Most food will be washed in water treated with disinfectant. That's what people do at home.
Do they disinfect the water they wash your silverware with? Probably not.
Will you enjoy yourself if you are paranoid about all of this? Probably not.

Apart from getting something horrible like an eColi or parasitic infection, which we all fear, what is sensible?
I think it is fair to assume that at some point we are going to get an upset system.
It often happens a week into the trip and sometimes not until after two weeks.
Usually Pepto-bismol takes care of it easily. At this point eating yogurt daily seems to help calm things too.
We carry antibiotic and strong anti-diarrhea meds just in case.
The trick is in not panicking and using it prematurely until I am sure it is serious.
I've overmedicated in the past and want to avoid that.

I think it is just about as likely to have problems in Chicago or Idaho as it is in Mexico.
I've had my share of stomach problems from local Idaho restaurants.

As soon as you get sick, the first tendency is to blame whatever your last meal was.
It could just as easily be an accumulation of new things over the past week or two.
Your system will have some problem adjusting to any new area you travel to.

We travelled for two weeks through the area where you are going.
I got gut problems after coming home.
I blamed it, rightly or wrongly, on the odd tasting guacamole from the upscale cafe in Akumal the day before we left for home.
Pepto for four days fixed it.

Everybody has a story. Everybody has theories how to avoid it.
I know people who take one Cipro a day as a preventative. I wouldn't do that.

Merida and Cancun, Tulum, et al. are so tourist oriented, with so many restaurants, you won't have a problem. Bottled water, sodas, wine, beer, juice - are all available in many, many small stores. If you're driving, buy a couple gallons of water and keep it handy. I like to eat the local, "street" food and I go to ones that are popular and busy. A couple times, in Tulum, I went to a busy corner where some tables were set up and they were selling various foods out of coolers, already prepared. I bought one of each thing to try them out - they were great - and only about 30 cents each. Again, in Mahajual, I bought tamales from a guy who was going down the main street selling them from the back of the truck from coolers. Very good and only 80 cents each. For me, it adds to the travel experience. You could also buy your own fresh fruit from markets and slice it yourself. Avocados are good too.

useful information!

I'm thinking of carrying a couple of bottled water there myself and buy fruits from the market (there should be markets within walking distance in Playa del Carmen and Tulum, right?) for the first few days to adjust my stomach while start buying food from the street vendors. I'd like to try local foods instead of going to formal restaurants. First is to experience real Mexican food, second is to save money. ;p

And I guess some medicine would be handy, too, just in case :)

There's a wonderful produce market in Playa del Carmen called DAC - Ave 30 and about a block north of Constituyentes.

Tamales are probably the safest thing to eat. They are cooked by steam and continue to steam all day in the containers they are sold from. Corn sold on the street should also be safe. Although I've never figured out why the mayonaisse that sits out all day doesn't kill everyone. As to rancid oil...once you taste it you will know. The government has put a lot of effort into educating street vendors on safe food handling the last few years. Pays off in reduced health care costs. You are going to get sick at some point...everyone does. But it won't kill you. Follow the simple rules of treatment and it soon passes. BTW...if you aren' feeling a lot better in 48-72 hrs. then consider seeing a doctor in case it is something worse. The good news is that if you keep traveling and eating you develop immunities just like many locals.

idahoslim has a great summary of the best advice.
I have never had even a moment of even slight discomfort,and this is from various trips from the Yucatan to the central highlands, Pacific states and gulf states like Veracruz. however I am very cautious about eating from street venders and as suggested above, I always observe for at least a day to see if the venders are popular and busy and never eat late in the day when it is possible that the food has been sitting around. If I have the slightest doubt I do not eat the street food. It is probably some of the best food around and safe most of the time, but just not worth taking a chance to ruin my trip.
The best deal, IMO, is to find a restaurant that offers a menu del dia for around 30-70 pesos where lots of happy locals are eating. Hard to beat a 4-5 course meal (appetizer, soup, two main dishes, desert are not uncommon) . I always drink the agua fresca in these restaurtants(love the agua jamacia!) but do not buy agua fresca from street venders.
I do buy fresh fruit from the markets and slice it myself. And in addition to the above and I think that this important: to maintain digestive comfort eat yogurt daily, commercial yogurt and even better if available locally made yogurt (I had some great local made yogurt in Queretaro and Puebla.) Ironically, the only time I ever had any digestive problems was a few days after arriving back in the US after a month in the Yucatan in 2004, was "uncomfortable" for about a week of again eating American food with that "alien" bacteria.
I have also talked to people (Americans and Canadians) who are living in various parts of Mexico and and only got sick after eating at American franchise chain restaurans in Mexico. Perhaps a coincidence, but I think not.