I was about to post a question similar to yours, until I read your post and saw you were asking about much the same issue. I have had 3 yorkies the first 2 were/are sweet as can be and love(d) to greet other people and dogs, but our 7 month old Gatsby is a terror when ever he sees anything strange outside (usually strange dogs or people, but he also may freak out if he sees a sprinkler or a ball or anything that is different).
I used to think that this problem was limited to more aggressive breads such as Dachsunds, Chihuahuas or Chow Chows, because all the Yorkies we ever met were always so sweet, while some members of these often more aggressive breeds would act anti-social, but now I know that yorkies can have this problem too.
I read in one book that you should grab and shut their muzzle and growl at them when they do this; I have tried that and it may have some impact, but it does not really work as well as I would have hoped. And its hard to do this when walking two at once. Also, when Gatsby acts like this, he often gets his sister to act aggressive as well, and before we got him she was as sweet as could be. WHen he gets her started, there is no way I can effectively train them. I am hoping to control him at the YorkieTalk MeetUp next year. I think all those other little dogs will get him used to the idea that there is no reason to be aggressive.
