It seems to me that there are two issues here:

1. The guild is clearly "to blame" for putting the item in the wrong area. If one of your top ranked members inadvertently makes an error, accept the responsibility, and try to put into place methods so it doesn't happen again.

2. The person who not only took the item but then used it on their own character before asking an officer about it was demonstrateably thinking more about themselves than the guild.
Either:
a) the person had exhibited this kind of attitude and behavior before and this was the last straw for the guild officers and they were justified in kicking them out, or
b) the person had been an exemplary guild member, and had donated far more to the guild in the past than they had received in turn, and was at least in their own mind "owed," and the guild officers over reacted by kicking them out because of their own distress about an error being made and to cover up the error (change the guild discussion focus to that "terrible" person rather than have it focus on their own mistake).

Maybe bad publicity is as good as none, but by making a public big deal out of it the guild has done themselves no good recruiting wise.

And if I was the person who took the item, I would be doing something to try to make it up and settle it....who wants to be thought of as a potential guild member who would think about themselves first and their guild second? Even something as simple as a promise to always use the item at mats plus no charge for guild members as long as they are on the server should be good enough I would have thought (meaning that the person is stuck with that profession as long as they are on the server). I don't think they should have to replace the item - making it for guild members is equivalent I think.

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