I'm trying to build am image that supports X11 and will use the official 7" touch screen from the Raspberry Pi organization for the raspberrypi2. To test I've built both core-image-x11 and core-image sato with no changes to either recipe and am getting the same behavior from both. What happens is when I plug in the unit the splash screen is shown on the 7" display then the output from the kernel booting is shown. At some point during the kernel boot process the screen goes black but it doesn't look like the display has turned off. I am hooked up to the debug pins on the header and am able to log into the pi so the device has booted properly. Also if I attach a monitor via HDMI to the pi the core-image-x11 shows a terminal on the monitor and the core-image-sato shows the desktop. If you touch the touch screen the cursor will move around on the monitor so the touch screen is working properly.
I can't find anything in the meta-raspberry pi documentation for how to enable to the 7" touch screen but I did find from an old mailing archive that adding
RASPBERRYPI_DISPLAY = "1"
to the local.conf is all that is needed. I have added that to the end of my local.conf but that didn't fix the issue. That was from ~3years ago though so I'm wondering if things have changed.