Second generation I know for sure, but when exactly was it used?

The hat itself looks old. But the patch is a repro (looks like the Tom Grace version from several years ago).

But your question prompted me to try and figure out when the smaller patch started being used. I know at the Gurley dedication, the larger patch with the slanted lettering was still in use. So, the smaller patch stared being used sometime after that date. Also--the one original hat I've seen with that patch was a cap made by Lee, with the Lee label on the front, below the patch.

My guess would be the hat is a real railroad hat worn by someone who worked a railroad somewhere, but not Disneyland. The patch is definately Tom Grace's, or a reproduction off of Tom's. Modern patches have a plastic/vinyl backing whcih you can feel through the material if you squish the patch. Earlier patches are all cloth. This holds true for military patches as well and is how we spot the fakes right off.

You can tell the hat and patch are from different times. The hat is very dirty and the patch is super clean, the white tread would at least show grim and dirt of years of age.

Well, it would also be a suppositon to assume the hat was used in railroading as well.

True. I have hats that look like that after a few days of doing yardwork.