If you're comparing a 100hp/48ap player using a 15 dmg rusty vs a 140hp/120ap player using a 27 damage HIGH LEVEL dagger the problem isnt with balancing, its with the players and what they chose to equip.
In this case the V tag is important to implement, but not otherwise.
With the piercing rate change that mcsic suggested (0.7->0.6), this shouldn't be a problem. But when you kick someone for using a dagger on you, do it because they have more hp and a non-rusty weapon, not because you think a rusty sword user with 100ap40ap should beat a 27 dmg dagger user with 140hp/120ap.