That won't work because of how distribution with <content> works. Distributed nodes will fill the first content they match, so your example will have all distributed nodes appear in the first list item. You either have to decorate the nodes for distribution (put a unique class on each item and use <content select=".uniqueClass-%item number%"> in your dom-repeat), or manually move the nodes.
You might want to rethink this design. Maybe it would be easier to wrap each node you want in this list in a <ul> higher up, and just have <li><content></content></li> where you have this dom-repeat.