Hi Lee,
I don't know if I can add all that much to Berkley's meticulous detective work, but here it goes, though it would be nice if we could have a full pic of the blade.
1. It looks like a `puņal'
2. the brand `...GEN' suggests SOLINGEN, There were a number of Creole blades ending in SOLINGEN, though I looked through Dagas de Plata but couldn't see a brand that resembled it. German blades were and are still highly valued in Sth America.
3. The style of the silver-work does look like dating back to the 1860s and does not look like a high end ornamental dress accessory, rather a knife that was used, but probably belonging to someone reasonably well paid.
4. The script of `NAPOLEON III'is a bit of a teaser. Napoleon III's excursion into Mexico overlapped with the US civil war, and unfolded during the years 1862-67. I don't know how the region reacted to it, Perhaps Gonzalo could add something as he is an expert on Mexican affairs.
5. Lee's suggetion of linking this piece with Orelie is a fascinating idea because he was around at about the same time and he was french.
6. The other great regional upheaval around that time was the war of the triple alliance against Paraguay by Argentina, Uruguay and Brazil in 1864-70
http://en.wikipedia.org/wiki/War_of_Triple_Alliance. There was not so indirect British intervention, but am not aware of any involvement by France.
7. If we can't clear this mystery, this is one instance where I would be tempted to drop a line to Abel Domenech.
Cheers
Chris