Oaxaca city is very safe beyond the usual precautions not too drunk flashing $ etc. That area mentioned is a rowdy part of town, has a wild west feel to it. Tons of cheap bars and a fair number of working girls. Somewhat rough but nothing too crazy, you will stand out as a foriegner and will may have to deal with some unruly wasted mezcal heads but thats about it. Quality of ladies is marginal but there are occasional pretties that are in town to make a few bucks to take back to their villages. My first time there I banged an 18 year old with the hard teenage tits and classical native dark looks and gold plated teeth in a tiny room above the bar for like 10 bucks.
Totally safe during the day and I'd say night too but just everyone is waaay more wasted and you know thats when trouble can erupt anywhere.
There are probably 7 or 8 brothels around town, a few open late but also a few day-timers. Cabbies will know and Noticias Oaxaca has a few classifieds.
The city itself is beautiful and a nice place to relax in.
There are a slew of strip joints on the way out of town, forget the street name. I used to go to one called Havana and always had a good time, very friendly chicas. Never did take out but drank all night with non stop hard on playing with pussies tits, jacked off in the privado room, etc. Good sleazy Mexican fun.
Have fun, just remember watch your back!
Oh and if you do like to drink it is a must that you go check out Casa Del Mezcal just off the main zocalo, everyone will know where it is. Try the good stuff it really is a fine drink. It is a legendary bar in Oaxaca and oozes atmosphere.
