I’m pretty sure that IFS does not apply to quoted strings since word splitting happens before the quote removal (see Shell Expansion).

$ ( files=$(ls); IFS=$'\n' ; for x in $files; do echo $x; done )
file a.txt
file b.txt
plainfile.txt

$ ( files=$(ls); IFS=$'\n' ; for x in "$files"; do echo $x; done )
file a.txt file b.txt plainfile.txt

For maximum pedantry, it may be worth mentioning that filenames in typical Linux file systems can contain newline characters.

Wouldn’t for i in "$LIST"; just result in a single loop iteration with $i being the entirety of $LIST?