Is it grammatically correct to use "it" to refer back to its whole preceding sentence or part of its preceding sentence?

Question

1.I once stole some apples at the market, but It was for my starving children, not for me.

It = "I once stole some apples at the market"

2.He said that he didn't want to live alone but had to reluctantly. It seemed to be for his family, not for himself.

It = "but had to reluctantly"

3.While his artwork was put up for auction for $19 million dollars merely because of his reputation, it looked too clumsy to be worthy of the price. It is why I tend to disregard artists.

It = "his artwork was put up for auction $19 million dollars merely because of his reputation"

Q1) Is it grammatically wrong to use "it" to refer back to a clause or sentence?

Q2) In each sentence, did I guess right that "it" refers back to the bold part?

Q3) Can I use "this, that, or which" in place of "it" in each sentence?

Q4) Even if it's not grammatically correct to use "it" to refer back to a clause or sentence, is it the one of the mistakes even native speakers often make?

I couldn't find out "it" can be used to refer to a clause or sentence in my dictionaries, though I'm not sure whether this use of "it" is listed in other dictionaries.

Answer 1

Q1) No. It's very common to mention something once, and then refer to it (the something) in subsequent clauses or sentences

Q2) I don't think so - not quite anyway (plus there are two 'it's in the 3rd example). This is how I would interpret it:

1. I once stole some apples at the market, but it was for my starving children, not for me.

   it = the action of stealing the apples

2. He said that he didn't want to live alone but had to reluctantly. It seemed to be for his family, not for himself.

   It = "living alone" or "living alone reluctantly"

3. While his artwork was put up for auction for $19 million dollars merely because of his reputation, it looked too clumsy to be worthy of the price. It is why I tend to disregard artists.

   it = his artwork
   It = the whole previous sentence (artwork being up for auction at high prices when it doesn't look worth it)

Q3) this and that could be used and understood in all instances except for it referring to his artwork. Which is generally used to join two related sentences instead of using a fullstop.

1. I once stole some apples at the market, which were for my starving children, not me.
2. He said that he didn't want to live alone but had to reluctantly, which seemed to be for his family, not for himself.
3. While his artwork was put up for auction for $19 million dollars merely because of his reputation, it looked too clumsy to be worthy of the price, which is why I tend to disregard artists.

Q4) it is possibly used more in speech as the tempo and pauses used in speech help to make it clear what it is.