Donald Matheson was found to have pocketed the money while head at Hermitage Academy, in Helensburgh, after charging the owner of an ice cream van pound;10 a day to sell its wares in the playground for nearly 20 months.
Criminal proceedings involving the one-time president of the Headteachers' Association of Scotland were abandoned in 2007 when the van owner could not be traced; Argyll and Bute Council had earlier made no ruling on whether he was culpable.
But the General Teaching Council for Scotland's disciplinary sub-committee - a panel Mr Matheson had chaired on one occasion - this week decided there was enough evidence to find him guilty and remove his name from the teaching register.
Ill-health prevented Mr Matheson, 60, from appearing at GTCS headquarters in Edinburgh.
Mr Matheson had explained that the van could provide a regular boost to school funds, office manager Maureen Purves told the hearing.
Every Friday afternoon, someone from the van would bring in pound;50, which staff were instructed to put in an envelope marked for "Mr Matheson: ice cream money".
Ms Purves became concerned when small amounts of money started to go missing, and took colleagues' concerns to the headteacher.
Argyll and Bute Council's former head of secondary education, Ronald Gould, did not learn that the van owners were being charged by Mr Matheson until May 2005; they had been coming to the playground every school day since October 2003.
He emailed Mr Matheson about the issue on May 24, but he failed to reply and did not turn up at a meeting the next day - arranged to deal with separate business - apparently because his car had broken down.
Elaine Holmes, a former clerical assistant at the school, recalled that Mr Matheson handed her an envelope with notes totalling pound;1,650 on May 25, which he was "very insistent" should be banked as "donations from the ice cream van". The same day, Argyll and Bute Council auditors were arriving to examine the books.
The pound;1,650 was still some pound;1,600 short of the sum the auditors later decided would have been collected from the van owners.
Mr Matheson was eventually suspended on full pay and the council started disciplinary proceedings. He then resigned, and the council made no ruling on the matter.
But this week Mr Gould said Mr Matheson was guilty of "sustained failure" which "amounted to deceit".
Mr Matheson had claimed he kept the cash in a safe. That was denied by all office staff involved in the hearing, during which the former head's lawyer said the cash had been in a filing cabinet instead.
Staff also said there had been no receipts or records of expenditure for the school's general purpose fund, and that only Mr Matheson knew exactly how much money was coming in and going out.
Mr Matheson was a key negotiator during the post-McCrone talks in 2000 on teachers' pay and conditions, and was outspoken about the under-funding of secondary schools.