A found a Hatters hat on a chair in either the legal or waterfront district,it was added to my inventory. Any ideas where to use it?

No idea. But have you already encountered the hatter gang? If I hadn't killed them already when I found the hat, I'd see if it was possible to pass for one of them.

But maybe all it is is a clue that a gang member was there.

The hat must have more to it surely.
Some way of using it, turning a reward, just something more then a clue.
It shows as a mission item as well as a clue.
Gotta be more to it.

In the same room there's a note saying about the key at the Hatters and he's going to get it, signed Pete.
Which is shown as a clue when read.

I have the hat too. Too late to use it now though because I've killed the entire gang.

Well I didn't find anyone or option to use the hat.
I hadn't even interacted with anyone in the level before picking up the hat.
I was looking for a Hatter character without his hat! (due to the Mission Item text saying a Hatter must of left hat while stealing the key) ...lol
But no success

Also tried the start of the mission different ways looking for an opening that leads to the hat being found or used.

Any time I approached anyone in the area they just go hostile.
Tried from every angle, up high or down low...
Looks like it's just another prop to make you scratch your head and waste time trying to find where it belongs.
Nada by the looks.

The hat might be for a later mission then

You do find him, but he's dead

Clearly, Daud puts the hat on.

It could for one of the next DLC missions?

I'd love to know why this hat is around too.

I'm not sure it will be used in the next DLC because (I assume) that is as separate as Knife of Dunwall is. I might be wrong of course. In the meantime, I'm in a bad NEED TO KNOW situation with that hat!