Rich and TrilinguisT are correct. In order to contract 'it' with 'is', the 'it' has to be the subject of the grammatical construction in which 'is' is the verb. In this case, the 'it' is the object of a prepositional phrase that modifies 'a lot', which is the subject that actually goes with the 'is' in question. If we diagrammed the sentence, the 'it' would be on a completely different level from the 'is'.
So you could say "English grammar is hard and a lot of it is pointless" (as TrilinguisT suggested) or you could say "English grammar is hard and it's pointless."
Grammatically speaking, of course. In practice, you're welcome to say whatever the heck you want.