The scheme, at St Paul's College, would ultimately lead to the loss of playing fields used by many clubs.
It was given the go-ahead despite more than 1,000 local objections, with the council and its chief executive, Owen Keegan, among those who objected.
Members of the community recently decided to seek a judicial review and have raised thousands of euro for the costly court case.
Most councillors now believe that it's their role to seek a judicial review, separately from the residents.
Cllr Alison Gilliland said: "Like my fellow councillors, I'm appalled at the lack of consideration that An Bord Pleanala has taken.
"I reject the lack of democracy. We made a decision here and over 1,000 local people also took the time to object to this.
"This appalling decision is an example of misguided government direction.
"I can see down the line that this will happen again and again and again. We will lose our recreational and green space and just have houses thrown up willy-nilly."
Cllr Sean Paul Mahon said: "If we let this go our development plan is redundant.
"Not only that, but we might as well let our planners go too because An Bord Pleanala [seems to be] the new planning department for the city of Dublin and for the whole country."
However, Cllr Ciaran Cuffe did not agree that a judicial review was the best approach.
"We're in the middle of a housing crisis," he said.
"Judicial reviews are expensive and time-consuming."
Local campaigners estimate that it will cost about €5,000 for a barrister to assess the case. The next step would be to accumulate all the necessary paperwork, which could cost €25,000.
If the application is granted it could cost both the developer and An Bord Pleanala more than €125,000 each.
But if the case goes against the objectors they could lose the same amount.
Dublin City Council and the residents have until May 23 to make their application in the High Court.
Speaking at the meeting, Mr Keegan said he would agree to get advice on a possible judicial review despite ruling out such a move previously. "I think that's a reasonable outcome," he said.
The decision, which was made under a fast-track planning process, is subject to 24 conditions. At least 10pc of all homes will be for social housing.
Last year, An Bord Pleanala saw about 30 judicial review outcomes. Out of these, only two cases were judgments against the board.
An Bord Pleanala does not comment on individual cases.
Developer Marlet Property Group has previously said: "This development will provide 500 badly needed houses close to Dublin city. It will respect the wonderful amenity that is the neighbouring St Anne's Park."
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