I generally use "this is" for это in that case, and feel it sounds way more natural than "it is".
Yes, the English translation seems a calque. The typical usage would be: Кто такой Толстой? Это великий русский писатель. In English it would rather be he is. But I'm not sure that it's ok to translate "это" as "he is" in a separate sentence.
Yes, this is very strange and needs to be fixed. In this example, we are translating TO ENGLISH. Therefore, in this situation, the correct answer should be "The", "This". Basically Anything BUT "It". Which is the only answer it will accept. Sorry, this is a bug :). We are translated to English to convey the correct meaning in OUR language (for this example). In English, "It" would never be used... unless something un-human was a great writer.
I know its a picky, and please know my tone is meant to be light, and helpful if possible... its no big deal.
I should put that at the end of every post. My wife tells me I always offend people... yet I never mean to :)
You are, however, correct in that "it" is incorrect in English. "The" wouldn't work because you lose это, but "This" technically should work...
As someone else whose wife says is frequently offensive, I've found one way to reduce it is to not repeat points whenever possible within a single post/spoken statement. I don't understand it myself, but it seems to work most of the time. Hope that helps you too!
Can this be right? Это? It is? Given that Russian likes to call tables and beds "he" and "she", surely an actual human writer gets a gender? :)
See https://www.duolingo.com/comment/11536858 - это is not a pronoun and has no gender.
In addition, quite many professions may be used in masculine for both genders, like инженер (no feminine form), директор (there is директриса but it sounds informal), тестировщик (you can say тестировщица but it is also informal, even given the fact that the most russian QA engineers are female). But it never concerns writers as I see (писатель/писательница).