To answer your questions, a chocolate yorkie is nothing more than a yorkie with a color abnormality. Doesn't mean they aren't really Yorkies, doesn't mean they are sickly.
You are correct--pups should not be placed until they are older. 7-8 weeks is too young, even if they are healthy, even if they are weaned, is still TOO YOUNG!
Because of all the factors you've mentioned, I would be very cautious about this 'breeder.' The things you have stated are not exactly aspects that ethical, respected breeders flaunt or stive for or practice.
