You have couple of problems there. First of your not setting the value. Replace just generates new value. Second problem is that in your case you should probably use replace-all instead of replace.
Replace replaces only the first instance.
// Scope should have one var. Combine those vars.
var imgTitle = "fizz",
imgTitle2 = "fizz",
imgInfo = "buzz",
imgSrc = "foo",
liHTML = "<li class='imgThumbLi ui-draggable' title='IMG_TITLE'><img class='image' src='IMG_SRC' title='IMG_TITLE'/><div class='imageInfo'><p class='detailTitle'>IMG_INFO</p></div></li>";
// Search and replace all dummy values.
liHTML = liHTML.replace(new RegExp("IMG_TITLE", 'g'), imgTitle);
liHTML = liHTML.replace(new RegExp("IMG_TITLE2", 'g'), imgTitle2);
liHTML = liHTML.replace(new RegExp("IMG_SRC", 'g'), imgSrc);
liHTML = liHTML.replace(new RegExp("IMG_INFO", 'g'), imgInfo);
alert(liHTML);