Wooden crown is no good to Peter (7)
I believe the answer is:
treetop
'wooden crown' is the definition.
(the top or 'crown' of a tree)
'no good to peter' is the wordplay.
'no good' indicates an anagram (no good can mean faulty or defective).
'to'+'peter'='topeter'
'topeter' is an anagram of 'TREETOP'.
'is' acts as a link.
(Other definitions for treetop that I've seen before include "Highest branch location" , "High point of a plane, for example" , "To Peter (anag)" , "` `Rockaby baby on a .......' '" , "for baby, a rocky situation" .)