FIRST - Check your system for signs of a rootkit as documented here, here or here. I personally like chkrootkit as a quick check.
1298 failed messages can be a lot, depending on what your normal volume is. You should check the bounce messages to see if they look like normal messages from your environment. If they aren't familiar, you've been compromised.
Clean up! If that means a rebuild, tracking down the bad processes, restoring from backup, etc. You'll need to remedy the situation that prompted the block.
I would also recommend doing exactly what the error message states. From there, browse to:
When you see this error message in your SMTP logs (where x.x.x.x is your IP address), it’s because of either of the following:
We are seeing unusual traffic from your IP address.
Email from your mail server is generating complaints from Yahoo! Mail users.
Please note that this is typically a temporary situation, and we encourage you to retry sending email to our servers approximately four hours after you encounter this error message.
If you see this error consistently over a 48-hour period, please fill out this form to give us enough information that we can actively pursue the issue.
Visit the form mentioned in the warning and work on getting unblocked.
Set the expectation for your users, though. This may take some time.