The problem is that you are setting the %chan variable in the alias. But you have to set it in the event, and then call it in the alias.

Code:
on *:JOIN:#: {
  if (smallworld isin $chan) && ($nick($chan,0) >= 2) { set -u5 %chan # | refresherr }
}

refresherr { 
  .timer 1 1 hop %chan #
}