Agree with innerscorecard here. This book was written before the proliferation of index funds where it's much easier to just get the market return. People were paying some big fees for mutual funds and a lot of folks still tried to invest on their own.
Lynch was very successful, but his style of investing is anything but average or ordinary. He really ran a multi-strategy fund. He was a value investor, a growth investor and special-situations investor all in one, during a time where most managers were one-trick ponies. He did an incredible amount of research before he invested, and I doubt most people would be willing to work as hard as he did.
His advice to only invest in what you know, is the best and most universal principle in his books however. It's something we can all take away and apply to our investing.
As far as the comments about stock picking vs index funds, the 2 aren't always mutually exclusive. If the individual investor is running concentrated portfolios (usually needed to outperform), then they could be highly volatile. The investor may decide he doesn't want that much volatility in his retirement portfolios and put index funds in those. His stock picking portfolio could be used to fund his daily expenses.
Or, the investor's personality may be exactly the opposite. They don't like the volatility of their concentrated portfolio being needed for their daily expenses, so a balanced index fund portfolio may be used for that, while their retirement portfolio is used for stock-picking.
Or, they could stock pick for the equity part of the portfolio, and hold bond index funds for the bond portion (because they are better at stocks than bonds).
Or, the active investor's strategy could be uncorrelated to long-only, buy and hold stock and bond funds. Both strategies would pay off in the end, perhaps even having similar returns by themselves. But the active guy's strategy usually does well when stocks are doing poorly, or vice-versa. It would then make sense to combine the portfolios and have a higher risk-adjusted return in the end.
There are many reasons why someone would choose to be active and passive at the same time.