The teacher feared she was going to be fired and so hatched a plan for one of her students' grandfathers to threaten the principal.
A colleague she told of the plan reported the teacher to the principal, who contacted police.
The teacher was arrested and charged with attempting to commit or procure the commission of a crime.
She received diversion and no formal conviction was entered against her.
The teacher wrote a letter to apologise for her actions, donated $150 to charity and attended counselling.
At the disciplinary hearing, she said she had tried to arrange the gang member because she was under "extreme stress of feeling bullied".
She said she "did not intend to harm the principal's or school's reputation".
The teacher said her comment to her colleague about organising the "knee-capping" was said "in confidence and in an extremely depressed and distressed state to another teacher whom she thought was her friend".
The woman quit after being arrested but told the Teachers' Council she wanted to return to the profession.
The disciplinary hearing was to establish if she should be deregistered as a teacher.
The tribunal said the "difficult decision" in the case was whether the responsibilities to the public and the profession could be met without deregistering the teacher.
"We have concluded that we can [meet those responsibilities] but only after very careful consideration and by the finest of margins," the report says.
The teacher told the hearing she was under significant stress and she had "learned her lesson".
"Finally, the [teacher] could scarcely have made it clearer that she was desperate to return to teaching, both because she was passionate about being a teacher and for financial reasons," the report said.
The tribunal decided conditions for the teacher to meet before she could go back to the classroom, including that she obtain a report from a psychiatrist confirming her "psychological health is sufficiently robust", provide a copy of her disciplinary report to future employers, complete professional development courses and undergo intensive supervision for a 20-week period.