Bryce, 59, was issued with a defect notice on Miller St, North Sydney, outside a WYD event on July 12, 2008.
The notice said he had a "life size and lifelike mannequin prominently fitted to the car roof racks likely to cause distraction."
He was also charged with using a vehicle that did not comply with standards.
The imitation Popemobile was built on the top of a family sedan, complete with a dummy pope holding a big gold phone.
The matter was withdrawn before Magistrate David Heilpern in the Downing Centre Local Court.
After his court appearance, Mr Bryce said he was glad the matter had been resolved.
"I'm very pleased. I think it's a great victory for free speech and the right to criticise religion," he said.
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