The Hatter is definitely one of Batman's lesser villains, but I think he can be pretty wicked when handle correctly. I've always thought of him as a bit of a child predator, possessing them by his signature mind control.
I think Tim Sale and Jeph Loeb handled him best in Haunted Knight.
I remember seeing the beginning of a Mad Hatter arc about a year or so ago, treating his tea parties as if he had an alcoholic's kind of fixation on tea, and staying away from the stuff helped prevent him from going on another crime spree. Finding out that a blond woman he'd met _wasn't_ named Alice, unfortunately...
A truly creepy and much underused villain. The Mad Hatter is second only to The Joker in my book. He's a cut abouve modern 'villains' like bane and hush.