There is no way to have an unescaped html in a link title

If you're going to link to image, use image_tag helper, or just mark your <img> tag has html_safe!

link_to image_tag('foo.png'), '/go/to/foo'

link_to '<img src="foo.png" />'.html_safe!, '/go/to/foo'

All string that isn't marked as html_safe will always be escaped in Rails 3.

Ok makes sense however there is an inconsistency with the implementation of url_for. Does it need that escape logic there ?

I think there's a use case for escape logic there. One of the example would be if you're going to include the url generated from url_for as a parameter in GET request, so it would escape & in the value.