Read Marla Apt's response:
If the actions of the studio owner are affecting students and other teachers as well as you, it's probably in the best interest of the entire studio to share your observations with her. It is important to be honest.
It is helpful to first reflect on how you think you would feel if you were to receive the same information. Approach her in the spirit of friendship, with the intention of helping her and her studio and not confronting or attacking her, so that she can absorb your feedback. She may be your boss, but she is also a fellow yoga teacher, and it is always worthwhile to share teaching experiences and information. Often people who appear to be completely self-centered are protecting themselves from being hurt by others. In sharing your observations with her, be prepared to do more listening than talking. You will not be able to control how she responds to your conversation. However, it sounds like you are prepared to leave the studio. If it comes to that, at least you will leave knowing that you tried to improve the situation.