That is like a combo of two of the most-often misinterpreted phrases.
I will skip an explanation of 「いやー」 in this context because I have already talked at length about it in the Q&A @Choclate has linked to above. It does not mean "I don't think so."; moreover, it does not mean anything negative.
「よくやるよな」 can be used in two opposite ways, which is probably why it gets misinterpreted all the time. The word 「よく」 can also be tricky.
1) Positive: Said when one is impressed. ("Well done!")
2) Negative: Said when one is disgusted. ("Dang, how would they even want to do that?")
The intonations will differ between the two usages if spoken.
If A actually said "It's horrible!", then B's reply 「よくやるよな」 would have to be the negative version of the two above.