It is a dummy subject when it points forward to a to... phrase as in your example.
It benefits me to do something.
This is indeed the intended basic construction, as you say, or the sentence would be meaningless. As to whether it sounds too German, I'll skip that question for now; but I agree that the original sentence is ugly in any case.
It benefits me to know people.
It gives me great pleasure to announce Lady Ashton.
It suits you to arrive early.
It suits you, to arrive early.
It suits you, arriving early.
In all of these examples, the answer to what benefits me?, what gives me great pleasure?, what suits you? is not only it, but also the to... infinitive. You could rephrase it as to know / knowing people benefits me, etc. The reason is that the to... infinitival phrase has a very strong connection to the subject of the main verb.
Some would analyse to... as the true subject. Others would say it is the subject and to... an appositional phrase to it. In other words, the phrase modifies it and expands on it. For comparison, apposition to the subject can also be observed in sentences of this type:
Her mother likes you, the woman in yellow.
In sentences of the type it... to... as in your example, a comma is not normally written. But it is possible, and it even becomes almost mandatory when you replace the infinitive with a gerund, as in it suits you, arriving early. A comma is a sign of apposition here.
The word it is called a dummy subject, because it functions syntactically as the subject, but it is almost without semantic content and merely serves to point forward to the to... phrase.
It should indeed be whom in formal language, since it is the object of know; but who is also often used instead of whom in somewhat less formal language.