The story 'The Rattrap' by Selma Lagerlöf portrays the transformation of a vagabond peddler who emerges as a man of finer human qualities. The peddler initially appears as an unscrupulous and dishonest person, but his encounter with the kind-hearted Edla and her family brings about a change in him. The following are the ways in which the peddler evolves as a better human being:

1. Compassion: The peddler's interaction with Edla's father, who treated him with kindness, awakened his sense of compassion. He realized that he had been living a pitiful life and that there were people who were willing to help him despite his vagabond status.

2. Honesty: When the peddler stole money from Edla's father, he was consumed by guilt and returned the money. His conscience made him realize that honesty was more important than wealth.

3. Gratitude: The peddler showed gratitude towards Edla and her family for their kindness. He acknowledged that he was wrong in his previous actions and was grateful for the chance to redeem himself.

4. Self-realization: The peddler came to the realization that his life was not fulfilling and that he needed to change his ways. He admitted that he had been living a life of deceit and that he needed to make amends.

5. Acceptance: The peddler accepted his past mistakes and took responsibility for his actions. He acknowledged that he couldn't change the past but could strive to be a better person in the future.

In conclusion, the peddler in 'The Rattrap' emerges as a man of finer human qualities despite being a vagabond. His encounter with Edla and her family transforms him into a compassionate, honest, grateful, self-realized, and accepting person. The story highlights the power of kindness and compassion and how it can bring about positive changes in people.