1、语法正确,虽然听着很别扭(无奈啊)
2、不能省略it,因为这里it是指“天气” (如:it is raining.) 如果省略了的话就是在说 Summer doesn't rain much不合英语语法.
3、Mr Smith is the only foreigner that he knows.这句话其实也有“it” 是不过是 “he”,也是“他”的意思.我觉得你是想说这么一个例子:
Mr Smith is the only foreigner that doesn't speak a foreign language.
这里因为前后主语相同 (Mr.Smith既是 ...is the only foreigner 的主语,又是 .doesn't speak a foreign language的主语),所以不需要it,he,she,they之类的东西.
总结:当前后主语一样时,that后面何以直接跟动词(省略主语重复),不一样时,that后面必须是重伸主语的完整句子.