Rejected Paper by the Associate Editor
Based on your description I suspect an appeal will not work. That's because you are not disputing the reasons that went into their decision, you are only disputing the decision. But they have already made the decision. Saying &quot;your reviewers were right, but your decision was wrong&quot; is not likely to change their minds.
To have a real chance at changing their minds, you need to argue that their reasons for rejection were wrong, e.g.:

Reviewer said X, but X is provably incorrect, because [reasons].
Reviewer said this topic isn't worth spending time on, but your journal published [these papers] on that very topic.
Reviewer said your manuscript doesn't explain Y, but it does, and here is the paragraph.

That's not to say you can't appeal - you can if you want to - it's just that it probably won't work.
I think, based on your description, the best course of action is to rewrite the paper such that it's clearer, then submit to another journal. See also this question about the same situation where the reviewers didn't understand the paper. You can also ask the two co-authors, they should be experienced enough to offer suggestions on what to do next.