Okay, this is interesting... I revisited the site using Chrome to see if I could see if that JS file was executing correctly, and this time, the code showed all of the images (and doesn't appear to be using my template), even though it only did one at a time earlier (I even tested with multiple images in the gallery). It generates the code for the entire list item, img tag and closing tags and all, when it does this.
I hadn't changed anything since I posted last, but had to clear Chrome's cache and do a ?flush=all on the page for it to use the right template (both for my last response and for now). And, of course, it's now generating the list item correctly, though sans the "gallery-layout loaded" class assignments.
So far, this has been an issue exclusive to Chrome. The imagegallery_init.js loads correctly in Firefox, but not in Chrome for some reason.
(On a side note, it appears that a line in your ImageGallery.css file is missing a semicolon. The color declaration in "#pagination-imagegallery a:link, #pagination-imagegallery a:visited".)