True, anything can happen with almost two months to go (just ask any O's fans), but keep in mind that a month ago, the Yankees were 3.5 games out of first place- the same spot that tehy're in now. If they play the remainder of the season the way they did last month (and there's little reason to suggest they will improve much, given their pitching problems), they will find themselves out of the playoffs for the first time since 1994.
However, I would be a little more confident that the Yankees won't win the division if the Red Sox were playing better baseball. Despite an eight-game winning streak, their problems were apparent even when they were playing Kansas City, but didn't actually cost them any games until they started palying a better team (the Twins). Something needs to be done about the bullpen and rotation, such as bringing back Jon Papelbon as a reliever, and possibly calling up Abe Alvarez, with some of their starters (such as Wade Miller and Bronson Arroyo) being shaky lately. I saw Alvarez pitch in Pawtucket yesterday, and he struck out nine in just 5.1 innings, and Papelbon pitched a perfect ninth inning. I say give both of them another chance in the majors, and see how they do.
These kids in the minors have really electrifying stuff. I think that they can all throw heat but their off speed pitches are not developed yet. I think that once they get a good second pitch like a split or slider and a good change they will have the tools. Playing in Boston requires a certain mental capacity which is another story....