"Generally it is green."
Translation:Generalmente es verde.
«lo» is an object pronoun. You cannot use it here as "it" is this sentence's subject. An equivalent example of what you said in English would be if the Hulk said something like "Me am generally green." "Me" is the object pronoun, not the subject pronoun "I," which would be grammatically correct in that sentence.
If ever you want to translate "it" into Spanish when it is the subject of the sentence (something I do not recommend you do; it is not necessary with the conjugated verb and is a sure-fire indicator that you are not a native speaker), use «él» if whatever "it" refers to is masculine and «la» if "it" is feminine.
Usually it is best to be literal with Duo for the simple constructs. If they give you "in general", then use "en general." If they give you "generally", then use "generalmente." However, there are many times when a literal translation will be wrong or worse. For those, you just have to learn and remember.
It is not «está» because its being green is essential to "it." Let us say the "it" is lettuce. Generally, lettuce is green. Since being green is essential to lettuce's being, we use «ser». However, if you have had the lettuce for a while in the refrigerator for a while and it is already changing colors, you might ask if «Ainda está verde?». Hope this helps. :)