From the look of it, you’d think they were giving the phones away.

[kadioguy]

[From a TOEIC test]

This is Charlie Swift from Channel 14 News. I’m standing outside Granger Electronics this moring, where hundreds of people have spent hours waiting to buy the new Aria 7D mobile phone - available starting today. Some began waiting in line as early as four A.M. From the look of it, you’d think they were giving the phones away. [...]

[Source]
-----
1. "It" refers to "the line of people".

2. "They" refers to "the shop assistants".

3."Were" is used here (rather than "are"), because this is unreal, just an imagination.

Is that right?

 

[5jj]

1. It is the situation.
2. 'They' is possibly Granger electronics. It's also possibly just a vague subject for the active version of '... the phones were being given away'.
3. Yes.

 

[jutfrank]

1. I'd say it refers generally to the situation. The speaker is expressing his impression of what's going on.

2. they is the people who are responsible for such a decision to give stock away—that would likely be the owners or possibly the management.

3. Yes.

 

[Tdol]

Were they giving the phones away?

 

[kadioguy]

Were they giving the phones away?

I don't know what you are trying to say.