Decades ago I watched Bill Chaudet as he performed a Blackstone, Sr card routine. At one point the spectator is directed to point his index finger and stick it into the deck. Bill got a huge laugh at as the man held up his hand showing that he only had a small portion of his index finger....and everyone in the group knew it.
Bill waited a moment and said, "You've done this before." Another huge laugh.
Fast forward 30 years...I'm doing the Lester Lake Guillotine and one of the people I have up, at the end of the routine, starts waving his sleeve, his cuff flapping, showing that he has a hand missing. He was the union president and everyone knew he'd been born without his right hand. A huge laugh.
I waited for the laughter to die down, put my arm around his shoulders and delivered Bill's line. Again, another huge laugh.
The only time in 20+ years of doing the guillotine have I ever had a "bad" reaction was at a private party with a little girl who thought I was really going to chop off her uncle's head. I saw her beginning to tear up in the front row so I stopped my show, walked over to her, got down on one knee and explained that this was "just pretend," that we were having fun and her uncle wasn't in any danger and that he would be OK at the end of the trick. She smiled and as I was using a wireless mic, everyone heard what I was saying. I finished the trick and got a great hand.
It's all in the presentation and the performer's attitude.