I don't say this randomly, I play for quite some time and I often look at the teecomp statistics and the hammer is always the weapon that has the least number of kills even if we always carry this weapon.
If this weapon is so balanced so how can you explain in a average game on CTF2 (30 min), the total number of kill with the hammer of all the players don't generally exceed the 15 kills, while only 1 player may have 50 kills with the grenade launcher...
Don't forget that to success in hurting someone with a hammer you must be near him and aim, which is very difficult. Currently the best way to kill with the hammer is to block your opponent into a corner and be under him which usually quite rare.
It is too much easy to emerge victorious from a battle against a hammer without getting hit and if you have enough ammunition. It's quite funny because the hammer is supposed to be a close combat weapon but it loses all those duels against other weapons, yeah, mostly players prefer to use another weapon in a close combat and that works!, the worst part is that the laser is supposed to be a ranged weapon but it always win his duel against the hammer!.
The only duel the hammer has a chance to win is against the rocket launcher and only if the possessor of this weapon is low hp, because in close combat the rocket launcher hurt his user. The thing that make me laugh is the rocket launcher do that same damage as the hammer if you get hit by your own rocket so generaly if you can tank enought your opponent kill himself while you touched him maybe once ...
The power of the hammer is much too low compared to the risks to take and the skills required to be near your opponent, I think the increase a little bit of the rate of fire could be a idea, or change damage from 3 to 4 or else increase the size of the hammer for up the range a litle bit