So I am going to explain what needs to be done in a few steps and of course in a way that even non-hackers can understand. Note that this solution will work on a number of Ralink and Realtek chipsets.
(Hint: Do you want to do a quick business? Click here to order x10 of these WiFi dongles and follow the instructions to install on to your clients. Thank me later!).
Download and install this package. This will install the KExt for Yosemite. Do not Reboot yet.
Edit Info.plist (/System/Library/Extensions/RT2870USBWirelessDriver.kext/Contents) and add the following code:
Note for the hackers: I added a new key for the Product ID and Vendor ID of this particular dongle (Get this from the system profiler). Make sure you translate Hex value to Decimal. For example in my case Product Id is 0x7601 (decimal: 30209) and Vendor Id is 5263 (decimal: 5263).
Fix Permissions and Refresh Kext by running the following code in terminal:
Download and copy the DWA-140 utility to the System Preferences pane:
If you go to the System Preferences -> DWA-140 (at the bottom), you should be able to see the nearby WiFi networks (or far ones if you connected an external antenna!).
Since I have a hidden SSID WiFi router (security through obscurity!) I had to manually enter its details by clicking on the "Create Profile Drawer" and add a new profile for my connection.
The reliability and performance is excellent to say the least:
EDIT: Some people experience difficulties with the DWA-140 utility. As a recommendation you can try the MediaTek tool. Download and copy to your applications folder.