Both are fine. If "it" is missing from the list of acceptable answers, it should be reported.
It has been accepted all along, maybe the original question was more about why the main translation uses that rather than it. I think this is mostly a matter of taste. I sort of feel that That is a big advantage works slightly better as an independent clause than It is a big advantage, the latter makes me expect a continuation like '… to have this or be that'. But I think both are perfectly fine.
Yes, it originally meant the first - and better - part of something you split in two, e.g. an estate. The för is more like "fore" or even "better" in that aspect, just like its German counterpart which we got it from.
English actually has a direct cognate "foredeal", but it's borderline archaic outside of Scotland nowadays.