As The Newt says, John and Jack are discussing a possible course of action, which is why Jack uses "would".
In any case, the idea is in the present, not the future. Jack could say "That is a great idea", which is more positive than "That would be a great idea", but he could not say "That will be a great idea".
"I think it would be a great idea" is okay, but I cannot think of a situation where I would use both "it" (rather than "that") and "would be" (rather than "is"). If Jack is simply responding to John, then "that" is a lot better than "it", and if Jack is responding to someone else then they really need to use the more emphatic "is":