Dagg - dogged by injury and form issues last year which prevented his selection to the World Cup - said he couldn't see a way back into the All Blacks last year.
His last test was against the Springboks in Johannesburg in July, but a stint travelling and a long pre-season with the Crusaders in which he came right physically and mentally have paved the way for his recall.
"Last year you kind of think, 'oh well, time's up'. But then I had to sit down and take a deep breath and re-assess things. When I got back to playing footy... I just wanted to have fun. It's awesome to be back in this environment and have another opportunity."
Hansen said of Dagg: "He's played well for the Crusaders and I'd expect him to really hum on Saturday night."
Asked if the Crusader had changed during his time away, Hansen said: "There's not too many guys that leave the All Black environment and then get back in it who don't change, because you actually realise what you're missing out on. During my time here starting as an assistant coach in 2004 right to this day, everyone that comes back in has a little bit more edge about them and a greater desire even than they did when they first came in."
Hansen believes the time out this week will help Savea re-discover that edge.
"His weight is good now, his skinny's [skin-fold tests] are good, his attitude is outstanding, but I think he's just a little bogged down and we just need to freshen him mentally. While it was tempting to play him again, especially on his home patch, he's working on a lot of things and just at the moment we feel it would be better he didn't play.
"When someone's bogged down, they're usually a bit clunky and stuck and you don't see them doing much. When you see them training really well and then they go and have a performance which is clunky and pretty wooden, you can usually tell without being a psychologist that there is something going on.
"If you go back through the [Eden Park] game with Julian, Waisake had 17 touches [of the ball] and Julian had four. He just wasn't Julian.
"He's a class player, we know that. In the past I think he probably hasn't worked hard enough, but that's not the issue at the moment, the issue is he's working really really hard and he's probably trying too hard to the point where he's over-thinking things."