Seventh level halfling fighter4/rogue3:
1: R1: WF: dagger (1d6 sneak)
2: F1: PBS
3: R2: Quickdraw (evasion)
4: F2: Rapid Shot
5: R3: (2d6 sneak)
6: F3: TWF
7: F4 WS: Dagger
Assume 20 Dex (16 base is not too bad even at 28 point buy, +2 racial mod, +2 item)
He's throwing at (+6 BAB, +5 Dex, +1 Size, +1 halfling throw, +1 WF, +1 PBS) +15/+10. Even if he Rapid Shoots he's at +13/+13/+8. Rapid Shot + TWF is +11/+11/+11/+6. He'll likely hit.
Assume 14 Str (14 base, -2 racial mod, +2 item). Within 30' he'll do 1d4+5 damage. Which is 2d4+10 if he hits with two throws, or 3d4+15 for three (assuming the iterative attack misses). That's not crazy damage, but it's respectable since he can do it from a distance (and the bad guy won't be able to do a full melee attack in return).
Add in the sneak attack damage and it starts to get ugly. The +5 init mod is pretty decent, and he's stealthy (+19 Hide, counting full ranks, size mod, and elven cloak), so he'll likely get the drop on his opponent. If he has a friendly wizard with Improved Invis then he's good to go. A full invisible attack from this guy will do significant damage: 4d4+20+8d6, is he's within 30' and all hit.
Ouch!
There are a few problems. Even a halfling with 14 Str can only carry so many dagger. Damage reduction is a big issue. Undead, constructs, plants, and things with uncanny dodge are other problems. But yeah, daggers can be effective.
If he wants melee/doesn't want to be a halfling, go the kukri or short sword route. Kukri are curved daggers with blades on only one edge, short swords are big daggers. Check out Swashbuckler (int to damage), and the Dervish PRC (esp for kukris).