If Appel is healthy there definitely is room in the AAA rotation. Higher end stuff will always get extra chances. His star has fallen because the injuries prevented any chance of seeing that high end stuff. He had other issues putting things together, but stranger things have happened to other top prospects as well.
I am happy we get one more year to look at him. The whole reliever conversion is probably a good idea if they can get him to pitch out of the stretch effectively. He just may be fragile and unable to hold his stuff together for more than 3-4 innings. The Red Sox had some similar concerns with Papelbon if I recall correctly. Not saying Appel has pitched as well as Papelbon in his minor league career. Just that there are some similarities with the conversion that might happen.
On the AAA rotation specifically there are lots of candidates: Lively, Thompson, Eshelman, Leibrandt, Taveras, Eflin, Anderson, Leiter. One or two of those will be on the big league club (assuming Pivetta is up also). Of the whole list, however, has any shown they mgiht be considerably more than a 4th or 5th starter? Not really. Appel has not either to date consistently, but he has at least flashed stuff that might be seen as better.
Whoever pitches the best will get chances. Others will move to the bullpen where their stuff might play up. And all of them might be surpassed by Romero or Kilome by next July or August. Appel probably has a low chance of success, but if he did actually succeed a slightly higher chance of being good than most of the others on that list.