La gente insiste en que es hermosa, pero en realidad no lo es.

English Translation

People keep saying that she’s beautiful, but really, she isn’t.

What is the lo referring to here?
Is it the abstract concept of “es hermosa”?
Is it a set phrase, a filler word, or something similar?

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It saves the speaker from having to repeat the predicative, in this case “hermosa”. The sentence would be incomplete without it.

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Ah, OK, thanks for that.

I’d seen lo used to refer back to objects before in this way (irrespective of gender), but I don’t recall seeing it used for people, so now I know that it applies in this case as well.

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