There is no easy answer to this. As with most things the right answer is: it depends!
If your LabVIEW DLL was created with a different version than the LabVIEW version you are running your lvlib in, you are safe. The DLL will be executed in the context of the runtime version of LabVIEW that corresponds with the LabVIEW version used to create the DLL. Your LabVIEW lib is executing directly in the calling LabVIEW system, so they are as isolized from each other as you can get on the same machine instance.
However if you load the DLL into the same LabVIEW development system version as was used to create it, things get more interesting. In that case LabVIEW loads the VIs inside the DLL into the same LabVIEW system to save some performance. Loading the DLL into a different LabVIEW runtime requires marshaling of all function parameters across process boundaries, since the runtime system is a different process than your LabVIEW system, which is quite costly. Short circuiting this saves a lot of overhead. But if the VIs in the DLL are not in the same version as the current LabVIEW version, this can not be done as the DLL VIs are normally stored without diagram and can therefore not be recompiled for the current LabVIEW platform.
So in this case things get a bit more complicated. I haven't tested so far if VIs inside DLLs would get loaded into a special application context in that case. It would be the best way to guarantee as much of similar behavior as if the DLL had to be loaded into a separate runtime. But it may also involve special difficulties that I'm not aware of.