MR Bernard Quinn, who was arrested as he tried to speak to the Princess Royal on Thursday night, was yesterday cleared by a court of conduct likely to cause a breach of the peace.
The magistrate, Mr Paul Firth, upheld a defence submission that Mr Quinn (53), who told police he had sexual fantasies about the princess, had no case to answer.
The court had heard that Mr Quinn, of Weston super Mare, Avon, had told police he wanted to ask the princess questions, saying "It is my right."
But Mr Firth said the prosecution had not satisfied him that violence would have been the natural consequence of Mr Quinn's behaviour, although there might perhaps have been a disturbance or unfortunate scene".
A psychiatrist, Dr James Higgins, said that Mr Quinn, who had been preoccupied with Princess Anne for more than three years, had a chronic mental illness, probably schizophrenia. But he did not feel he intended any physical harm to the princess.
The court heard that Mr Quinn was a father of two who walked out on his wife and £40,000 a year Rolls Royce chief engineer's job because of his obsession with the princess. He had repeatedly insisted he wanted to speak to her shortly before she was due to attend an event at St Nicholas' Church in Liverpool.
Dr Higgins said Mr Quinn, who seemed to him "a gentle man", had become frustrated by his failure to get replies to correspondence with Princess Anne and with other figures, including the President, Mrs Robinson.
Meanwhile, the Princess of Wales was at the centre of another scare when a man was arrested outside her London gym.
Dr Klaus Wagner (37) was later bailed by a magistrate on a charge of obstructing the highway.