I have done lots of searching this past week for more information about this tower, especially why and when it was demolished.  Above is an early 1920's brochure that was published by the Panama Pacific Line ships that has a really nice artists conception of the locks and the ornate little range light.  What a great image.  Below is another early 20's image/photo that I found that has the tower still in place (see the yellow arrow).  

I did find some controversial and negatives about this tower in a couple of places and seem like this little tower was not liked from the very beginning:

The Scientific American July 12, 1913:

In our issue of February 8th of this year we drew attention to the fact that the Panama Canal was in danger of being cheapened by the crude character of some of the structures which were being erected and to prove our contention we illustrated a range or light tower which had been built on the center wall of the lake approach to the Gatun Locks. This structure designed in the offices of the engineering force at the Isthmus is no doubt strong stable and perfectly adapted to its purpose of showing a light in a certain location at a fixed elevation for all time to come but considered as an architectural work it is about as ugly and inharmonious a piece of design as mortal eye ever looked upon. We had hoped that by this time the tower had been replaced either by a more graceful design in reinforced concrete or by a steel tower of open work construction similar in general outline to the Eiffel Tower. We understand however that any change in this direction is strongly opposed by the engineer in charge of that particular class of work.

The SCIENTIFIC AMERICAN commends this matter to the serious attention of the chairman of the Isthmian Canal Commission in the hope that he will authorize the expenditure of the relatively small amount of money that will be necessary to remove the present structure from its very conspicuous position and put in its place something that would be consistent with the dignity and great excellence of the engineering work at the Gatun.

Again in a report from the Canal Record:

There is a tragedy connected with the third or return track of the towing railroad which runs down the middle of the center wall. It had to be there and so did the range light that will guide ships across the lake into the upper fore bay of the locks. So they stuck that dignified lighthouse up on four bandy legs like a mangrove on its roots and when the Art Commission come down from Washington and see it they will say unkind things of the engineers.

So...with a bad start in the life of this little tower, it was surely destined to be removed one day.  It is only guess work at this time until I/we find more documentation of when and why it was demolished.

The bottom photo is a nice shot that CZ Images contributor Bill Fall  took on a transit in 2009 which shows the light tower that is being used today in the the same spot that the old tower was.  Bill tells me that a new type of light called the PEL Sector Light is now being used here and many other ranges of the Panama Canal.