Tinycore is here 12/1/2008! Welcome visitors.
So it seems busybox yes sometimes errors-out and sometimes enters an endless loop in an environment where SIGPIPE is disabled. GNU yes seems to consistently error-out and not enter endless loop.
Since all terminal emulators and shells seem to be affected, I think the problem may have something to do with how weston or labwc is being started. Can you suggest a way to start the graphical session different from this (which is what weston.tcz.info suggests):