Thanks for the above, your spot on, they have gone against the prejudice thing as well.
It just seems like excuse after excuse. Ill have a look at the clauses...
I'm going to be the devils advocate here. Not all children who get straight level 5's for their SATS are going to get a grammar place - teachers will have been pushing & tutoring them like mad to get those 5's (it reflects well on them and the school). I tend to think of 3 level 5's as an indicator that they are probably / possibly of grammar calibre - or to be more precise, I think if a child isn't predicted to get at least 2 L5's they're not likely to be suitable (there are, of course, exceptions).
Prejudice is important. You are appealing for your child. The school side is arguing on behalf all the other children who were offered a place, to say that if they took your child, the others would be badly affected (not enough computers, piano keyboards, cookers, and maybe one child would have to sit on the lap of another if there's not enough space in the classroom). One argument you can use is to look to see how many appeals were allowed in the previous years and ask how the school coped with them.
The final thing is that you must be absolutely sure that your child will be able to cope happily with grammar level teaching; being bottom and stressed in the class would not be fun, especially where they could well be towards the top of the class at a non-grammar school.
Other than that, good luck!