What is the penultimate letter? Is it simply "2" (i.e. "alHaa2iT") and if so, why is it written "ئِ" instead of "إِ" or "ءِ"?
The hamza (or glottal stop) is we studied when we were kids, is not a real letter, but more like a modifier. This modifier is placed either on the line on its own, or over a vowel to adjust its quality and make it as a glottal stop (and sometimes it comes under the Alif when this sound comes in the beginning of the word).
Here, the Hamza is in the middle of the word. We have to look at the letter before it to decide how to write this Hamza. We see that the letter before it is actually a long vowe "á" and thus we cannot mimic the vowel (more on that below), and in this case we look at the vowel of the Hamza itself. It is kasrah (-i), and thus it is placed on a "chair" as we call it or "sinna" ئ.
To elaborate more, let's see another word. The name and word "Fu'ád" (male's name, and also means "heart"). The vowel for the consonant before the hamza has "u" in (Fu), and hence, this hamza must be placed on Waw, and the name is written as فؤاد.
One more example: The word for "water well" is (Bi'r). In dialects now they say "beer" (yep like the English beer) neglecting this hamza in the middle. We see here that the consonant before hamza has (i) vowel, and thus this hamza must be written on Sinna, like this: بئر
These are few examples for when Hamza is in the middle of the word (and there are few exceptions to it). There are other rules for when hamza comes at the end of the word or at its beginning but no need to complicate things here, for the time being. I think such orthography system was created to help people read without using the diacritics all the time and thus we can realize whats the vowel on the letter before hamza by the way hamza is drawn. Don't worry if you make mistakes with it; I'm an Arab and i'm facing Arabs who don't know such orthography rules almost daily
Why dont they just use diacretics instead writing an extra "letter". It seems so unnecessary