This is an awesome idea for a weapon. Here are some better stat ideas:

Level 30 Dangerous Lunchbox


PROS
Taunting restores Spy's health by 75 points. He takes a small bite from the end of it, and makes a disgusted face.

When Spy is Ubercharged, normal melee attacks causes enemies to explode on defeat, shooting burning shrapnel at nearby enemies.

Causes enemies to burn for 10 seconds.

Causes Pyros to bleed for 13 seconds, instead of burning.

If used on MvM, burn time can be upgraded.

Other Spys deal less damage.


CONS

-15 damage than normal knives.

Spy can be seen slightly when cloaked.

If lit on fire, Spy will burn for an extra 3 seconds.

Takes more damage from Pyros when equipped

Deals less damage to Pyros when equipped.

When taunt health regen is used, Spy will be marked for death for 45 seconds.

When taunt is used, Spy will be unable to use the weapon for 15 seconds.

Can be awarded with a new acheivement:

SPYro: While burning, stab 8 Pyros (Not all at once)

These may not be that good, or too complex, but this is my first ever discussion, gentlemen.