Penetration sounds like a bit much, but on such a weak weapon I don't think it's a bad idea. It would really give people a big reason to take the M4 over other assault rifles and make it stand out more than basically being the Bullpup's older brother. I'm kinda leaning towards it would be ill-fitting, but tbh I'd like to try it out for a while and see how it feels. I'm sort of on the fence about it.
I really like the M4, and I always want to use it more, but it just feels outclassed. It's not a bad weapon, I just feel like the others are more effective and more fun to use. That's the biggest reason I'm for the idea of penetration, giving it something that stands out. But at the same time I worry that it would make it too unique/good and it would start to outclass the Tommy Guns, Mkb and AK too much. I'm struggling to really think of how to make it better without making it too out there. I was thinking of the idea of having like 3-5 mags that had penetration rounds, and you held alt-fire to load them. So you get a limited amount of penetration per round. But that seems sort of goofy, and raises the question of why don't all the assault rifles have that function, and this or that assault rifle should have the penetration mags, not the M4.
As for faster reload and larger mag size, I think the mag size is fine, but a faster reload would be nice. I think it would be good to make it one of the faster reloading weapons for Commando. I also think that would be nice for the M4203, so on Demo you could actually reload it fairly quick. Overall, I like what the M4 tries to go for, lots of ammo, but weaker. The problem is that you can really pick any two assault rifles and never run out of ammo, so you might as well pick some of the stronger ones. And if you're going to pick only one assault rifle to be paired with other offperk weapons, it's usually a better idea to take the FAL or SCAR.
As for the M4203, I don't really know how you can save that weapon. With its low grenade count, BB strength bullets, long reloads and hilarious price it's just ridiculous. At the very least, it should get the Commando damage bonus when you're using it as Commando, because then maybe some people would use it.