Janis,
It is obvious you take breeding very seriously. You are obviously making quite a bit of money off of breeding these dogs. I count 12 dams on your site. If you breed them once a year with an average of 4 puppies each (which I know you've had larger litters than that), that equals 48 puppies for the year. You are selling your puppies for $1500 - $2500. So lets say you get an average of $2000 a puppy. That is almost $100,000!!! Nice profit. So I'm not surprised you take breeding so seriously...
You can no possibly come on here and claim that you are a reputable breeder. I'm sorry but reputable breeders don't just buy dogs and breed them, they don't sell "teacups", and they health screen their dogs before they breed. Anyone that is educated on our wonderful breed knows there is no such thing as a "teacup" yorkie. Only breeders out to make money use this word - it fools people into thinking they are buying something rare or special and it allows the breeder to jack up the price (which you are). Janis, your breeding dogs are NOT quality Yorkshire Terriers. My dog came from a BYB and she meets the standard better than some of the dogs on your site. Have you ever read the Yorkie standard, gone to a dog show, seen a well-bred yorkie? Your dogs do NOT meet the standard. I could elaborate further but I won't (unless you just really want to know..I'm sure you don't care though). I will say this though...take a look at some champion Yorkshire Terriers and then take a look at your breeding dogs...HUGE differences.
Janis, do you do any health screening on your dogs before breeding them? By health screening, I don't mean just a regular exam by a vet. Do you have a full blood panel done, a urinalysis, thyroid panel, check for Luxating patellas and Legge calve perthes (exam & x-rays), bile acid test for Liver Shunt, etc? If you aren't doing these things, how do you know if your dogs are healthy? Do you have an extensive knowledge of your breeding dogs' pedigrees? If not, how do you know your dogs won't pass on a genetic defect? You said you've had your dogs DNA tested - I'm sorry but there is no genetic map of a dog yet...you can't look at a dog's DNA at this time and tell if they have a disease or defect yet. So what you said above is not true. You have to do extensive pedigree research and health screening to know that your breeding dogs won't pass a defect on. When you buy a random dog for breeding, you won't be able to research its pedigree..
You say this is the first time a defect has happened in one of your puppies. Maybe this has been the first life-threatening defect (and I hope it was...I hate to think of others going through what Vicki had to), but I guarantee you've had other puppies with defects. Do you stay in touch with all your buyers? If not, you won't know of any problems. My dog has Luxating Patella..I've never told her breeder...most of your buyers most likely haven't reported things to you either. Most BYB's don't care... they've got the money and have gotten rid of the dog...that's all that matters.
You should be ashamed of yourself for only returning half of Bleu's purchase price. Any reputable breeder would have refunded the entire amount at the least! Most reputable breeders would have also helped pay for the cost of surgery. Vicki paid $1500 for Bleu as she stated, you refunded $750...wow..she spent almost $10,000 on his surgery!! That $750 didn't make a dent. You should have at least given her the full amount back.
Janis, you need to go to
www.ytca.org and look at the Yorkshire Terrier standard and code of ethics. That is the starting place for what makes up a reputable breeder.. Also, look at your poor puppies for sale. Vicki got lucky...Bleu is adorable. But look at those poor dogs.
Look at the one you are selling as a "RARE CHOCOLATE" 
$2500 for a dog that has the longest nose I've ever seen and ears to match and hardly any hair on its face?? First of all that is not a chocolate (looks like a blue born)...second of all if it was, you shouldn't be selling it as "rare" and for a high price. Also, stop breeding such tiny dogs...reputable breeder usually breed females that are 5-7lbs (never under 4!!!!).
You just really need to take a step back... Vicki is right to warm people about breeders like you.