Why must "tempenya" be "it"? What does -nya mean here?
In this case "-nya" is the definite article. So the word-for-word translation would be "If you cook tempe, I eat the tempe". But instead we just say it, since it's a known antecedent.
There is nothing awkward in English about "I eat the tempeh," so at the very least, it should be accepted.