I ran this code with no problems
<?php
$string='Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet. Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet.
\begin{itemnize}
\item first outer
first outer second line
\begin{itemnize}
\item first inner first line with $x^2=y$
first inner second line
\item second inner
\end{itemnize}
\item second out
\end{itemnize}
Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet. Lorem ipsum dol';
//
$newlatex = preg_replace('/\\\\item(([\\s\\S]*)^[^\\\\item]+\\\\(?!\\\\item))/m','<li>$1</li>',$string);
print($string);
print($newlatex);
producing this result
\begin{itemnize}
<li> first outer
first outer second line
\begin{itemnize}
\item first inner first line with $x^2=y$
first inner second line
\item second inner
\end{itemnize}
\</li>item second out
\end{itemnize}
no apparent errors could you give more details on your errors?