what is the green hat on some peoples avatar (like Butler) and is it in any way connected to the item? lol

They aren't really related to the item. Fish used to auction them to sink tc, they are not available anymore.
Here's some info about it: http://forum.toribash.com/showthread.php?t=441738

would it still be possible to get one on your avatar? Also, I saw 2 of them on the market

Like I said, they are no longer available, you can't get them on your avatar anymore.

The green hat items are just normal 3d items that you can sell like any other item tho.