To start with your question, it isn't a question of setting a precedent. The LA isn't allowed to admit over the PAN other than in limited circumstances. That's what appeals are for.
A net capacity of 112 would normally lead to a PAN of 16. I presume from the other information you've given that this is the PAN for this school. With 2 infant classes that would give 24 in each class, matching their provisional class arrangement. If they were admitting up to PAN every year there would be 32 in each Junior class (16*4 = 64 children in Juniors, therefore 32 in each class) and the school would be full to capacity.
The case they should be trying to make is that admitting your son would lead to the school being over capacity if the current years 3, 4, 5 and 6 fill up - there would then be 16 in each year plus your son (so 16*7 + 1 = 113). That isn't a problem whilst he is in Infants but if the school is still over capacity by the time he reaches Y3 they would need to have at least one class of 33 in Juniors.
They are not objecting to having over 30 in a Junior class. As the school's class arrangement and PAN assume Junior classes of 32, such a case would be unsustainable. They are objecting to a Junior class of 33 - at least, that's what they should be doing although it sounds like they may not have expressed themselves very well.
It is interesting that the LA say that the school is prepared to countenance large class sizes. That says to me that the school and the LA don't agree on this appeal. The school isn't allowed to support your appeal but it might be worth asking the Head Teacher for their views before the appeal. If the Head says that they would be quite happy with a class size of 33, I would ask the LA's representative at the appeal to elaborate on their statement that the school is prepared to countenance large class sizes. The idea is to make sure the panel know that the school think they can cope with classes of 33.
This is stronger case than I thought initially as the panel may not be keen on the possibility of a Junior class with 33 pupils. However, it is still winnable.
The LA will answer any reasonable questions you ask before the appeal, as will the school. You already know that 6 children have left in the last 5 months. I would ask the LA how many children have left the school in the current academic year and in 2008/09. I would then ask them the same questions in the appeal to show the panel that there is a reasonable amount of movement at the school. The question of the RAF base closing is also worth bringing up.
If you can convince the panel that admitting your son to the school won't cause any problems, they should admit him regardless of your case. However, you should still have a good case to present stating why this is the right school for him. I'm sure you already know this from other threads but concentrate on the needs he has which can be met by this school and how his education will suffer if he goes elsewhere. Do NOT compare this school's league table position with that of the allocated school, bring up Ofsted reports or similar. If you say anything about the allocated school, concentrate on factors that make it wrong specifically for your son. Factors that affect most or all of the pupils there won't help you.
I hope the above is reasonably clear. If not, let me know and I'll try to explain.