This is interesting, because I've never found 'they' particlulary ugly or awkward. I do like 'it', though I suspect that the 'dehumanizing ring' to it would disappear if it were regularly used to refer to humans. The main reason I use 'they' instead is because, as far as I'm aware, it's accepted by a reasonably large contingent of authorities on the language as grammatically correct. I also find it less awkward than 'he/she' (I never know whether to say "he-she" or "he or she"), and popular alternatives like 'zie' (of which there are too many variations, none of which is used often enough that a general audience will not require an explanation). I think the main problem we'd have no matter what we chose would be effectively encouraging widespread use, and I don't have any very good ideas on how to do this.