You would have to do it manipulating the Text property of the control to also render the <img
tag for example:
foreach (var entity in metadata.Meta.Where(e => e.ReportableObject == true))
{
LinkButton lb = new LinkButton();
string iconpath = ResolveClientUrl("~/images/search/" + entity.ClassName + ".png");
lb.CssClass = "entityIcon";
lb.Text = string.Format(@"image <img src=""{0}"" class=""{1}"" />",iconpath,"imgSize");
entityHolder.Controls.Add(lb);
}