I've heard it said that Elizabeth is a tough businesswoman.

it在这里指的是：that Elizabeth is a tough businesswoman.
这里it是作形式宾语,真正的宾语是that Elizabeth is a tough businesswoman,由于它太长了,所以用it代替.
不可以换做是her,那是因为你没看懂结构.
hear sth done,听说某事被做.