The idea of the whirlwind attack is that the attacker is striking at everyone within their reach. Since polearms in Neverwinter Nights don't mechanically offer any more reach than any other melee weapon, that means everyone within approximately 3.5 meters, or ten feet.Myself, I see daggers as far more reasonable than, say, a spear for a whirlwind attack. Far easier to lunge and dodge around a fight with a short blade than to try and whip a spear around, stab, whip it around to the next target, and so forth. (It would be difficult to argue that they're throwing multiple daggers, since they only have one, and a "dagger" is a foot-long blade.)
Think of a tunnel fight. Normally you can only reach 2 ranks deep if you got a big mob to chase you in and normally only 2-3 opponents will be in a position to hit you (thus 1 rank). I would assume you'd be able to probably hit 3 ranks deep, maybe 4