and Hammer wont do enough damage I'm assuming
Why not? The hammer is also a Light weapon and does slightly more normal damage than the Magma Shortsword but slightly less fire damage.
Is the Volcanic Dagger good enough to replace the Shortsword?
No, the Magma Shortsword is one of the best fire elemental Light weapons (if not the best) in the game, but vulcan dagger + flaming dirk will still deal loads of damage to those weak against fire. Bear in mind you won't always need fire damage, and imo the best early game weapon for a rogue is Troll Cleaver for its high damage and Vicious attribute, it should last you for a long time. Few enemies are resistant to Toxic damage (equally few are weak against it too though). Later, Stiletto (don't underestimate Vicious2), especially if you're going for crit build.
I'm wondering what out of the 3 will get the most use. Breastplate would of course be great for grissenda, but would it work if I just used fire resist potion on her in areas with a couple pieces of meh fire resist gear? Saying like 50 or so fire res pre-final endgame bosses.
Probably the Magma Shortsword will find most use. But in my opinion very few items will be as useful as the Breastplate when you do need it, while for the Shortsword you'll still manage with the alternatives. In my experience, when you're heading to areas that require high elemental resistance, it'll be much more important to have the high resistance (at least 100) than it will be to have the highest damage. You'll want to have 100 resistance from gear alone plus potions on top imo. Typically as many elemental resistance gear/rings as you have, you'll need to equip and again nothing will offer the same Fire protection as the Breastplate until very end-game gear, even though you will need for more than one dungeon. (I play on hard difficulty though, might be different at normal or casual).