What's the meaning of the hat like character on top of 尔
Don't think it's a knife. Maybe a handle??

尔 variant of 爾｜尔

warping-wheel-er 尔爾 ěr (weaving not my strong point, not really sure what that is)

尔 seems to be the top part of 爾

Original meaning 本义: Meaning (orig) a rolled up spindle (now) meaning you.

你
Character decomposition 字形分解 [?]: 
Compound 你 older 儞

from person-left-ren 亻人 rén and 

related phonetic warping-wheel-er 尔爾 ěr.