The Smith has mlvl 10. Items dropped from monsters have ilvl = mlvl. Gull is level 6, so any dagger of ilvl 6 or higher has a chance at being Gull (provided it has a chance of being unique).
The reason Gull is so rare is that it's a dagger, with a very low TC (weap3). Early in the game, where daggers are likely to drop, monsters don't drop a lot of uniques (and people don't have a lot of MF in early act 1). Later in the game, with good-stuff-dropping monsters such as Mephisto, that low TC isn't as likely to drop anymore.
The reason Gull is so rare is that it's a dagger, with a very low TC (weap3). Early in the game, where daggers are likely to drop, monsters don't drop a lot of uniques (and people don't have a lot of MF in early act 1). Later in the game, with good-stuff-dropping monsters such as Mephisto, that low TC isn't as likely to drop anymore.