I'll give you another example of what this 2 year old can be like...
Their neighbours have cats...one is the most gorgeous little kitten..(that i fell in love with by the way!) I saw her in the garden carrying one of the adults around by IT'S HEAD!! when i told my sister what i had seen her doing, she told me she had seen her carrying the little kitten in this way and had to run outside to take the kitten off her! can you imagine if she picks up a baby Yorkie in this way!!!

If i tell them i think this is not a good idea all i will get from them is..'we will be watching her constantly with the dog!'

I'm sorry...but they were not watching her while she was torturing their neighbours cats were they!! you cannot physically watch/restrain a lively 2 year old every second of every day..it is impossible! at some point she IS going to get her hands on this puppy and do it some harm.