Hi, I'm jumping in late,but here's my idea. You could approach the owners in such a way as not to offend or accuse them of not taking care of their dog.
"Hi, my name is _____ and I noticed that you have a Yorkie. I have one also and wanted to know if you'd like to have them have a playdate. I also wanted to let you know that there is a HUGE market for Yorkies right now, and they are getting stolen right and left. I happened to be home all day yesterday and noticed that your baby was outside and it just scared me to death to think that someone could steal her (him?) and I know you'd be so heartbroken." Or somethign like that
Then let them know about the killer dog. While you're over there, maybe offer to help her fix the fencing so that a big dog would have a harder time getting to her dog, take a look at it and see if there's any food/water dishes or shelter of any kind.
REACH OUT! Then, if nothing has changed or the woman tells you to F off, call the animal control. A Yorkie will NOT get euthanized, believe me. Someone that works there would more than likely take it home. But please don't risk jail or even just the neighbor's wrath by taking the dog.