After over 10 hours of trying to find a workaround, this is how to resolve it if you face the challenge.
(1) Problem is being caused by permissions on yunohost + default implimentation of SSO as far as wordpress is concerned.
(2) How: Post a normal customer/subscriber clicks on logout from woocommerce account , in the yunohost version, wordpress tries to redirect you to wordpress login by default.(and not the woocommerce login as happens elsewhere)
(3) This wordpress login is in the restricted area and therefore yunohost steps in with a SSO page.
Solution I added wordpress admin area permission to visitors and post that the user account was allowed to log out. Not a secure solution and beats the yunohost permission management logic, but there was no option. As a secondary measure, have installed harder rules on limited login attempt logout, tightened recaptcha, cloudflare bot and sucuri to secure the admin page. Not as great, but for timebeing there is no other option.
@Aleks if a minor tweak here or there helps, please do include this in next release