She still exists, but

"Is this some kind of prank, Vomit Boy?" Ruby's eyes narrowed. "Because she's standing right next to you."

"Well, I--"

"Look, we appreciate that you let us borrow Yang," Ruby's expression softened from suspicion into exasperation. "But if you want your mannequin back, you have to ask, okay? You can't just barge into our room and grab her."

"Uh, yeah, I'll keep that in mind." So apparently Yang still existed, but everyone knew her as a mannequin-- *his* mannequin-- instead of as a human woman, or a member of Team RWBY. That was fine, Jaune could work with that. And he had a perfect chance, with Ruby right there in front of him.