Two weapon penalties are mitigated by use of the two weapon fighting feat and if the weapon is light.
Rapiers are not light weapons, however you can use your dexterity for the attack modifier instead of strength if you have the weapon finesse feat, even though the weapon isn't light.
Two weapon fighting gives you one extra attack per round with your secondary weapon, modified from the primary attack bonus.
Circumstances Primary Hand Off Hand
Normal penalties –6 –10
Off-hand weapon is light –4 –8
Two-Weapon Fighting feat –4 –4
Off-hand weapon is light
*and* Two-Weapon Fighting feat –2 –2
Improved Two Weapon fighting adds a second attack for their offhand weapon at -5, again modified by their primary attack bonus (and any other TWC modifiers)
So; running through the numbers;
The characters base attack is +13/+9.
The two weapon fighting feat gives a penalty to the primary attack of -4. Main attack is now +9/+5.
Two weapon fighting extra attack is at +9 as per main attack (ie the same -4 modifier), this gives +9/+9/+5.
Improved two weapon fighting adds an additional (Second) attack for the secondary weapon (currently at +9) at -5, (ie in addition to existing -4 penalty for the second weapon)
So this makes +9/+9/+5/+4 (Or +9/+9/+4/+4 if their attack mod is actually +13/+8)
With a light offhand weapon these modifiers would be:
+11/+11/+7/+6 (Or +11/+11/+6/+6 if their attack mod is actually +13/+8)
Quite the chainsaw.
Although it's neither feat nor psionic power, the effect you want's available as a low-priced magic item and a mid-level spell.
The Magic Item
The Web site Athas.org teeters on the extreme edge of official, saying that it
is recognized by WotC as the Official Dark Sun site on the internet. Content created on the official website is considered to be derivative work (as it is based on the intellectual property owned by Wizards of the Coast). This means that fan-created add-ons (such as new net books, adventures, etc.) are jointly owned by both Wizards of the Coast and the creator; neither can do anything outside the official website without the permission of the other. [sic]
Thus in the unlikely event the DM can be convinced to allow material from Athas.org (Comments' experiences say most DMs won't), the Athasian Emporium contains the
Third Eye Long Touch
The wearer of this kind of third eye [MIC 140] can use his touch attacks as if they were ranged touch attacks with a 30-foot range increment. It does not actually grant reach, and so does not help provide a flanking bonus or allow the wearer to make attacks of opportunity at any range greater than normal. The wearer uses his normal melee attack bonuses and normally affects the target with the effect of his touch if it hits, though the target of the attacks can benefit from cover or concealment.
Faint telekinesis; ML 1st; Craft Universal Item, far hand; Price 2,000 Cp.
The notation Cp--not to be confused with cp meaning copper pieces--stands for ceramic pieces, the Dark Sun campaign setting's equivalent to gold pieces. (Yes, in the Dark Sun campaign setting, the most commonly encountered currency isn't mined but baked. Just go with it.)
On the right face, this is a ridiculously useful item at a very low price.
The Spell
The 5th-level Sor/Wiz spell greater spectral hand [necro] (Dragon #303 36-7) is like the 2nd-level Sor/Wiz spell spectral hand [necro] (PH 282) except that "the hand can deliver any touch range spell of 6th-level or lower. In addition, if [the caster has] a supernatural effect tied to [his] touch, such as a paralyzing touch, the hand can deliver that effect as well." Further, the hand's 3d4 hp total is subtracted from the caster's own. (A non-greater yet still spectral hand has, instead, its 1d4 hp subtracted from its creator's hp.)
Just this far from fitting into a wand, one would have to cram the spell into a custom staff of greater spectral hand (34,050 gp; 4 lbs.) (50 charges) or talk to the DM about a different, even more custom magic item.
This is, admittedly, not a ranged touch attack and instead a means to use a touch attack at range, which may be close enough.
Best Answer
Yes, You Can Use It
It doesn't say that you need a free hand to make this attack, nor does it say that you need to be holding a particular item in hand to make it. So you can use the maneuver even if you used Two Weapon Fighting in the last round. The fact that it's a touch attack is just to tell you what AC number to roll against.
It would be very hard to use if that wasn't the case, as things like shields, two handed weapons, and even a torch would interfere otherwise.
Although not a rule, the flavor text gives you a hint about how this works:
The maneuver in this case is actually fire shooting off of you when someone else hits you and hitting them back, so you can picture it working without you having to have an empty hand.
No Penalties For It Either
Using Two Weapon Fighting imposes a penalty on your attacks (-2 in your case), but those penalties don't apply to this attack. The reason why is this:
The reason why is that Two Weapon Fighting doesn't specify that its penalties last outside of your action. Compare to something like Power Attack, where the effects last until your next turn.
So, go ahead and use your twin daggers. It doesn't affect your use of this ability at all.