It's one thing to have a problem with an employee.
It's another to have management in disarray.
I'm sensing that you are at a small-to medium size company.
Previous advice to document what's happened everything is pretty much what I'd do. Including all the breaks he's been given, the warnings, the second chances, etc. Also, without overtly embarassing your superiors, it may be good to document how you had it covered but then they met with the guys and undercut (use a different word) your authority without a good reason and made the guy impossible to deal with.
However, you've indicated that the way your bosses have (mis)managed this had put YOU in a bad spot and it has maybe messed up your chances for the future.
This may be a good time to seek whether your HR department, if there is one, has any written guidelines on disciplinary procedures, etc.
And maybe it's time to try to get some cohesiveness into the company's dealing with this guys. You may think about letting the other cooks around this pot know that they NEED these guidelines and to stick to them so that straightforward people issues don't turn into walking lawsuits.
What have you got in black and white that the guy has violated?
It unfortunately may be too late to deal with this guy normally, it might be at the point that the company has to hire an attorney. If so, just remember that it's the company's attorney, not yours. Don't expect him/her to save YOUR bacon.
Maybe it's time to think about other companies that might be better to work for. It almost sounds like it's very difficult for you to do your job, without a lot of second-guessing from above. On the other hand, in retrospect, did it help to try to keep the bosses out of it?
Maybe looking at WHY you wanted to keep them from getting involved would tell you something about bigger issues you're dealing with outside this situation. Do they have a pattern of injecting themselves into situations they don't need to?
And not least of all, maybe it's time to reflect on if you handled this the best way you could (only you can decide this) - did you let emotions (even justified ones) dictate your course, or were you able to put them aside?
I say this because I was once in a situation like what you describe, and I was on the guy's back once I'd had enough of him. Once he got on my list, he couldn't do anything right (in my eyes). Finally he got another job.
Then guess what? A few years later, I was on the receiving end of some real prick-ass mofo's
and [b]I[/b] was the perennial target. Boss 2 would intervene and rewrite Boss 1's appraisal of me. In my own defense, this was after their favorite target had enough and found a better job....[:D]