While camping last weekend, I was able to observe real Wild Kingdom life and death fights between a Yellow-Jacket and Bald-Faced Hornet.
I had some crackers and cheese on a plate, which a few Yellow-Jackets were trying to snitch. I soon noticed the slightly larger Bald-Faced Hornet loitering about a foot away. Apparently, one of the yellow-Jackets tried to chase the Hornet away by making a fly-by. Mistake. The Hornet suddenly attacked the Yellow-Jacket and a fight ensude on my plate of food. Lots of angry buzzing, as they both tried to land the fatal sting. The Hornet soon clipped off an antennae and a leg or two, and center-punched the Yellow-Jacket with it's stinger. The Yellow-Jacket stopped flapping it's wings and was well, subdued. The Hornet carried off the defeated Yellow-Jacket to it's fate. About 45 minutes later, the Hornet returned and repeated it's attack on another Yellow-Jacket. The result was the same.
SO, just get a colony of Bald-Faced Hornets nearby and they'll soon take care of the local Yellow-Jacket population.
I've seen the battle between Bald-Faced and Yellow Jackets as you described many times. The Bald-Faced always comes out on top.
If you're ever stung by either the best thing to do is make a paste of meat tenderizer and place it directly on the sting site. Having been stung 100's of times while working in the woods, I speak from experience. It sounds goofy I know, but it does work. Meat tenderizer contains Papain (from the Papaya fruit) and Papain breaks down the poison, which is pure protein in the same way it tenderizes meat. Don't laugh, it really works. If you're allergic you'll need to get to the hospital asap.