As expected, Pidgin 2.5.7 has arrived on -Current changelog. It should fixed the Yahoo login problem for now.
Here's the -Current changelog:
Sun Jun 21 13:23:07 CDT 2009 xap/pidgin-2.5.7-i486-1.txz: Upgraded. This fixes the Yahoo protocol plugin. Thanks to Willy Sudiarto Raharjo for letting us know about the problem and the new Pidgin release.