hmmm...not really sure why anyone would suggest PTS (sounds crazy to me)
LP is not a death sentence. Get a consult with a Board Cert. Ortho Surgeon and go from there. If they say surgery is a must, then I say have the surgery done, and I can guarantee you that he will be a brand new boy! And get him on Cosiquin - it's a really good joint supplement.
He should be on antib's for the cyst infection. And once cleared he should be good. If it comes back, than take care of that too!
Unfortunately, puppymill pups, whether they come from a rescue or petstore run a greater risk of defects and sickness, but it doesn't make then any less lovable or deserving at a healthy and happy life....
If you simply can not emotionally or financially take care of this innocent baby, than I suggest finding a reputable Yorkie rescue to take him in, as he surely doesn't deserve to be PTS