Is it a good idea to protest for a paper rejection?
Before you protest, you should decide what, if anything, you want to accomplish. If you improve the paper and resubmit it your protest won't have counted for much, and you need to improve it anyway because of the reviewer comments. But the editor has questioned the underlying model, so this may be the wrong venue for publishing this work. 

I suggest you think about the editors comments, improve the paper with the reviewer comments in mind and either resubmit or submit elsewhere. The last option may be best.