I used Yahoo Web Hosting ONCE. I too was trying to use a custom theme in WordPress and discovered that because of their limitations with WordPress, it simply could not be done.
Now what I did notice was that Yahoo offers WordPress that they have integrated with your hosting plan. That’s the one that’s a little limited. However, if you can manage to login via FTP, you can upload and install WordPress manually. I can’t remember if I tried it or not since I got a new host after realizing I was limited with Yahoo. But maybe you can try and see if that works.
you can use yahoo hosting BUT no htaccess file which means no custom permalinks. I have a site up on there right now and it is just horrible hosting. They do have good tech support though. I would recommend you use something else. The integrated wordpress is horrible also.