Yes, the 'free Yorkie you pay shipping' ads that you are seeing are just as you suspect--SCAMS! Most likely located in Camaroon/South Africa. A very well reknown scam within the Yorkie community.
Yes, you are correct--there is no such thing as a 'teacup' Yorkie. It's a marketing term used by unethical or uneducated breeders--you should steer clear of breeders who advertise their dogs as such at all costs.
My honest advice would be to focus more on obtaining a dog that is well bred, in good health, and a good representation of the breed standard instead of obsessing over size and supporting unethical breeders of so-called "teacups." Many reputable, honest breeders often have litters with smaller dogs in the 4 lb range. A better option would be to talk to find a good breeder who performs the proper health screening, promotes the breed standard and does not breed extremely small dogs for profit and ask if you could be put on a waiting list for a smaller pup.
As far as finding one--small or any other size--cheap or free...wishful thinking. (I personally want a Mercedes Benz cheap or free, but there just don't seem to be any around...) Bottom line is, a litter of pups is not cheap to raise. Breeders have to invest a lot of time and money into their programs and therefore try to cover their cost with the sale of pups that they don't hold back or implement into their own programs. I would question any 'cheap' dogs and wonder what corners the breeder cut in order to be able to let one go for that price.
I'm afraid to say, but if you have you are determined to obtain nothing other than a cheap/free tiny Yorkie, then you are likely on your way to the same heartbreak you experienced with your last one.