You would lose an O. mercatoris in a tank that big REAL fast. Quite likely you would never see it after releasing it into the tank.
There is no such thing as a "reef safe" octopus. If it doesn't harm the octopus the octopus will probably harm it. I keep lots of capnella (Kenya Tree) and anthelia (waving hand polyps), star polyps, xenia, some gorgonias, and macro algae. They grow fast, add color and movement, provide lots of cover, and they're safe to the touch. If they get destroyed they generally reattach.
Avoid sarcophyton and lobophyton. They have some nasty chemical defense. There are various other leathers that do that also like lemnalia. Don't even bother with "carnation" or "strawberry" corals like dendronepthea and scleronepthea.
All LPS I can think of are going to be threatening to the octopus. You're not going to want intense enough light to keep much as far as SPS goes, and I would avoid most of them as well anyway. I do keep a clam with mine for now. Whether or not it survives the entire duration of Kalypso's life with me, we'll see. So far she has climbed across it a few times but never stopped to investigate it.
I use 216 watts of T-5's over my tank which is overkill for an octopus tank. She is typical of her species (O. briareus) and prefers night time activity, but she comes out with the lights on full blast occasionally. I haven't noticed any ill effects as far as her vision goes.
Check out this book. It's a must-have for coral lovers in my opinion. Detailed information on pretty much anything you could want to keep. It can help you avoid any potentially harmful corals, which sadly is the majority of them.
Aquarium Corals : Selection, Husbandry, and Natural History: Borneman, Eric H., Michael, Scott W., Cairns-Michael, Janine: 9781890087470: Amazon.com: Books