After successfully customizing blocks everything appears great until you place it down, once placed it reverts back to it original texture. Is there something I need to add or is this just not supported?

Hah.. I wish..

When blocks are placed they lose all of their item's data, there is no way to change the blocks appearance based on their items.

There's a reason it's called Custom Item Textures.

Ha ha Yes, true, wishful thinking!