It's always worth appealing - almost all (Havering excepted!) LAs re-offer the discount after rejecting initial reps. If you appeal you give the LA the chance to trip themselves up in the process.... Even at the next stage of Notice to Owner, most will re-offer the discount if reps rejected - and that's another chance for them to mess it up.
GSV here shows plenty of evidence of people parking there, and you say there were cars there on the day so you could try for legitimate expectation that parking was allowed (tolerated?) in the location.