I currently have a level 10 Huntsman in TF2 but I have seen some people rolling with level 30+ Huntsmans and I can't work out how their level has gone up. 

The level is random for a weapon drop and does not change. Also the level makes no difference.

" I currently have a level 10 Huntsman in TF2 but I have seen some people rolling with level 30+ Huntsmans and I can't work out how their level has gone up.  "

Fools run in fear of my Level 78 jar of pee.

I was wondering what this was about too.  It's clear their planning something with these levels in the future.  I remember I had a couple of items with levels but I accidentely deleted most of them while deleting duplicates.  I do still have a level 25 jar of piss though.

People run in fear of my level 92 Huntsman.

I'm saddened that they fixed this, I was rocking out with my level 69 Ambassador.

Ask anyone on the steam forums and they will tell you it's a bug, that's how they think.
It almost certainly seees though that these weapons where given to add some variety to the trade system when it comes.