We experimentally study the polarization dynamics (orientation and ellipticity) of near-infrared light transmitted through magneto-optical yttrium iron garnet isolator crystal pairs using a modified balanced detection scheme. When the pair separation is in the submillimeter range, we observed a proximity effect in which the saturation field is reduced by up to 20%. One-dimensional calculations suggest that the proximity effect originates from magnetostatic interactions between the dipole moments of the isolator crystals.