I agree completely that the quality of Yorkies are declining greatly! That's why we are starting a club in South Africa. The quality is terrible here!
With regards to studding, I wouldn't use a stud who hasn't been shown in the show ring. It is paramount that you breed with the best available and if you can choose a stud, why not pay a little extra and go for a champ?
Responsible champion-stud owners also won't let their studs be bred with just any bitch and they should study the bitch's pedigree to determine compatibility. Chances are that if a champ owner won't allow their champ to be bred to a bitch, that bitch isn't standard, isn't healthy or isn't compatible with regards to genetics.
I think that if you are considering studding your dog, you need to get him involved in the show ring first to ensure that he is a good representation of the breed. I'd only stud him out if he is a champion, but that's just me.
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