Learn Spanish (Latin America): Lo dijo en serio.

Lo is the direct object pronoun representing "it" (the thing that was said). If you wanted to say "He said it to him/her," you would need an indirect object pronoun as well, making it Se lo dijo en serio.

How would we change this sentence to fit the impersonal "they" structure from this lesson, meaning "People said it seriously"?

You would simply change the verb to the third-person plural: Lo dijeron en serio. By using the plural verb without a subject pronoun like ellos, it creates that impersonal, generalized meaning.

Is dijo irregular? It doesn't follow the normal past tense rules for verbs ending in -ir.

Yes, decir (to say/tell) is highly irregular in the preterite (simple past) tense. The stem changes entirely to dij-, which is why the third-person singular form is dijo.