There are a lot worse things they could call them.
I think it would be esier to get YTCA to accept thje teacup word than it would be to get everyone to stop calling smaller Yorkies teacups. (Both impossible!) As long as they are not using the term to try to trick some unsuspecting buyer, or to ridicule or insult, I think we should just go with the flow. You can say, "there really are no teacup designations in the Yorkie breed. Yorkies are a toy breed." Smile, walk on and be secure in the knowledge that you own one of the most amazing breeds in the world! But no reason to jump on them or get mad.
We might know one thing that some of them don't -- the way I look at it, those same people probably know a lot of things I don't too. Life's too short to get all bent out of shape because someone refers to your dog as a teacup. I once tried to warn a breeder that she might not want to use that term on YT as many did not like it. I almost got keelhauled for that! None of it is worth it.