Well it's pretty obvious that Yahiko will die later and Nagato decide that he will make Yahiko the god he wanted too become even after death and used him as his main body. And in a way he succeeded. Pain is revered as a god by many. And Pain single handedly did all that damage to Konoha, the biggest and strongest military force in the world. I would say they made their dream come true.
BTW was Tiny one of Pains summons? I forgot if I'm confusing Kiba and his dog technique that they used in the Sound four fights, but i seem to recall a dog summon that had the Renningan. So could it be that he made a summon out of Tiny? And that it might have been his first time making something with those chakara rods? But then again he didn't seem to have anything special when Jiraya trained them and from what i can tell that comes after this.