pronoun it vs they?

You've got this the wrong way round. The word "it" MEANS a "thing" or a non-human being. It's not that people suddenly decided to stop using "it" for humans; it came into existence to cover a gap that human pronouns didn't cover.

the TN TN TN TN Ryu

It's not a connotation; it's the exact meaning of "it"- a pronoun used for a thing. The source is any dictionary. 

Simply:

because "it" is neuter

and humans (generally speaking) are not neuter.

Before the "current practice"

the pronoun used in cases of a sentence that was ambiguous or inclusive regarding gender

was  the male pronoun

which was a very long-standing convention in most Indo-European languages

including even ancient languages such as Biblical Hebrew.

That is to say: a sentence like this in modern times

- A person should look both ways before they cross the street.

was incorrect before around 1980-1985. (Why: pronoun does not agree in number with its antecedent.) The correct form was:

- A person should look both ways before he crosses the street.

In other words

we've never used neuter "it"

to refer to people.

In any case, as far as I know the use of "they" as a singular inclusive pronoun originated about the time I mentioned, around 1980 or so.

Notes:

- in the late 70s I learned "use the masculine pronoun" in high school

- about 1981 I learned at university that some people considered "they" to be more proper / politically correct in such cases