Divide up your azimuth and elevation into M and N ranges respectively. Now you have M*N "bins" (M = 870, N = 64).
Then (per bin) accumulate a histogram of points that project into that bin.
Finally, pick a representative value from each bin for the final range image. You could pick the average value (noisy, fast) or fit some distribution and then use that to pick the value (more precise, slow).