Pinwick71 - With one class in each year I agree it is not an infant class size appeal. That means the question as to why they have set PAN lower than IAN is interesting. It suggests the PAN may be artificially low and they could actually admit another 2 children each year without problems. On the other hand it may be that some of the classrooms are too small to take more than 20 children so, although the school can in theory hold 22 children per year, in practise it would mean mixing year groups together.
The fact that all three of the existing KS1 classes are over PAN is definitely something to bring up at appeal. It suggests that the school can cope with more pupils.
You say the school is pretty much full up to capacity. It would be worth finding out the calculated capacity. This will be two figures - a maximum and a minimum. The minimum is always 90% of the maximum. The official capacity will be somewhere in this range. If it is at or near the bottom of the range you can use this to suggest that the school isn't really full.
I wouldn't make too much of the transport difficulties. Appeal panels cannot generally use this kind of problem to justify admitting a child and Panelmember has told you how the LA are likely to respond.
Given the oversubscription criteria, you need to check that no children in category 4 have been admitted. If they have it means a mistake has been made. Even without a mistake I think there is a reasonable chance that an appeal panel will choose to admit your child.
Panelmember - No, I didn't know that. Interesting. Perhaps we should start charging for our services 
MissAnthrope - Your LA is talking rubbish. As far as I can tell most LAs allow parents to be on more than 3 waiting lists. Hopefully we will soon get a determination from the Schools Adjudicator on this issue.
CheeseMeisterGeneral - The problem you've got is that this is all, as you say, gossip and hearsay. If all the information you have heard about being 31st on the list and this other family getting a place to which they were not entitled you have a case. However, if all this is true and you are currently at the head of the waiting list you want them to get on and reject the place so that your daughter will get it. Equally, if all this is true you should win an appeal.
I think you also have an argument related to the fact your church doesn't record attendances properly and particularly the ruling on attending the "wrong" services. They cannot exclude certain services unless they tell you in their admission arrangements that these are excluded.
You can put an outline argument on the appeal form and say you will be providing further details later.