Edit child <li>s in wp_list_categories()

Greetings!

I can’t seem to figure out why wp_list_categories() will not show changes to the child <li>s. I want to manually add &raquo after the opening <li> and before the link, so that my list styles are supported in Internet Explorer. Like this:

<li class="cat-item">&raquo; <a href="link" rel="bookmark" title="article">Article Title</a></li>

It works everywhere in my sidebar except in wp_list_categories(), which I am editing in category_template.php. I tried adding it wherever there is an <li> in the code, but nothing shows up as output. It does show up when I add it to the <li> with the Title (“Categories”) so it seems like it should work.

$output .= '<li class="cat-item">&raquo; <a href="' . get_bloginfo( 'url' ) . '">' . $show_option_all . '</a></li>';

Am I missing something? Here is a link to my blog:

http://www.suttonrv.com/test/blog/

Thank you very much!