Soldiers:
Easy. Use Tellah�s level three magic to finish them off. When you win, you will fight Yang.
Yang:
He will always use Kick, so use high magic again to beat him quickly or have someone use Berserk on Cecil.
After the battle, Yang will regain his senses and join you again. While resting at the Inn, Yang will find a key that you can use to get to Baron Castle. You can also use the Weapon and Armour shops again. Unfortunately, Yang seems to have lost his equipment, so but him two Bolt Claws again. Buy Kenpo armour and Headbands and equip them on everybody.
You have a choice here to go back to Mist, where you can buy a Dancing Knife for Palom, which significantly raises his attack.
When ready, go through the door on the West side of Town.