I was able to include the updated interfaces file in yocto by doing the following so others can do this as well. I added recipes-core in my layer and then added an init-ifupdown folder. Inside that folder I added an init-ifupdown_1.0.bbappend file that contains only;
FILESEXTRAPATHS_prepend := "${THISDIR}/init-ifupdown-1.0:"
Then I put a init-ifupdown-1.0 folder that contains my updated interfaces file for yocto to include.
This is what my interfaces file contains where I set the eth0 to static and manually set it's address.
# /etc/network/interfaces -- configuration file for ifup(8), ifdown(8)
# The loopback interface
auto lo
iface lo inet loopback
# Wireless interfaces
iface wlan0 inet dhcp
wireless_mode managed
wireless_essid any
wpa-driver wext
wpa-conf /etc/wpa_supplicant.conf
iface atml0 inet dhcp
# Wired or wireless interfaces
auto eth0
iface eth0 inet static
address 10.254.253.1
netmask 255.255.255.0
iface eth1 inet dhcp
# Ethernet/RNDIS gadget (g_ether)
# ... or on host side, usbnet and random hwaddr
iface usb0 inet static
address 192.168.7.2
netmask 255.255.255.0
network 192.168.7.0
gateway 192.168.7.1
# Bluetooth networking
iface bnep0 inet dhcp
Hope this is helpful for someone else.