Treasure Hunter has a chance to Increase with Each Successive hit. Sneak Attack hits, and Trick Attack hits, have a higher chance to upgrade the Level of Treasure Hunter.
Your base Level of Treasure Hunter is determined by your Base TH, Plus Gear. For instance:
A Player with Treasure Hunter II, when Striking a mob, Would inflict "Treasure Hunter Lv. 2" on the Enemy. Upon which each upgrade would increase it by 1.
A Player with TH2 trait, Thief's Knife, and Assassin Armlets would inflict "Treasure Hunter Lv 4" on the Enemy, and so on.
The highest grade of Treasure Hunter will always be applied as a base, and a lower level Treasure Hunter cannot be applied. Example.
Player A has TH7 (Treasure Hunter III, Hands, Feet, Knife, and Atma).
Player B has TH4 (Treasure Hunter III, Knife.)
If Player A hits Enemy, It will apply TH7 base. Player B Cannot lower it to TH4 if he hits it. The highest Treasure Hunter always takes precedence. In the same light, if Player B hits first, It apply TH4, If Player A then act, It will Upgrade to TH7.
Lastly, Once you make an action on the Enemy getting on its Hatelist, You can De-Equip All of your Treasure Hunter gear and continue to Melee in your DD Set, and the Highest level of TH Applied will still be Active, Even if you're the only THF in the party.
Edit: And as for your Question. For all intents and Purposes, Triplus Dagger is a Superior weapon.