The text says no such thing.  The text there is discussing whether a non-Jew’s lineage carries forward once she or he converts.  Along the way, it quotes a verse in Ezekiel 23.

In Ezekiel 23, the prophet is admonishing the people of Israel for lusting after the gods of other nations.  In it, he casts the nations of Israel and Judah as a pair of sisters who go stray after other lovers.  In once instance (23:19-20) he says:

It is this latter verse (20) that is quoted in Yevamos 98a.

But the point is as follows:  First of all, it’s talking specifically about the Egyptians in Ezekiel’s days and earlier, who attracted the Israelites to their gods.  It is certainly not talking about all-non Jews in all times and places.  

But more importantly, this verse is only being quoted as a source for a point that is being made in the Talmud.  Nowhere does the Talmud make the statement that all non-Jewish children are animals.  The fact is that non-Jewish children, just like the rest of humanity, are created in the “image of God.”  They are certainly not animals.