Put simply, Sweet Tooth's lvl 2 is one of the worst lvl 2's in the game, easily. It doesn't even feel like a lvl 2, it feels like a lvl 1.5, if that makes sense.
However, I've thought long and hard about it, and the only balanced and reasonable way I can think of improving it is giving the explosion a radius buff. Right now, the explosion is absolutely tiny. You will just barely hit one person, nevermind two or three people.
The only safe way of using it is to run into a group of 3 and use it point blank by aiming it at their feet. It'll be a triple kill if you do it, but it should only be considered if you've accidentally gotten your level 2.