Was this seen more as a political or a religious sign?
Tutanchamon died during the Bronze Age. However, we know that small amounts of iron were used and produced in this time, and that ironworking was not unknown, just impractical. The temperatures required to smelt copper ores also yield small amounts of iron, so this was another possible source for the dagger's material. Another option is that we might have had underestimated the age of proper ironworking and that the iron was purposefully extracted from some kind of ore. The fact that these two options are now excluded, and that the dagger is 'just' meteoric iron, both confirms our existing models (no unknown technology is required), and emphasises the rarity of the object.