1. crazy. (From the crazy character called the Hatter in Lewis Carroll's Alice's Adventures in Wonderland.)
2. angry.(This is a misunderstanding of mad in the first sense. Folksy. The first as can be omitted.
Poor old John is as mad as a hatter.
All these screaming children are driving me mad as a hatter.
You make me so angry! I'm as mad as a hatter.
John can't control his temper. He's always mad as a hatter.