If you check out Rand's Intro to SEO slideshare (http://www.slideshare.net/randfish/introduction-to-seo-5003433) slide 46 and 47 talk about URL structure and specifically sub-domains.
As Rob said you do want to sub-folder structures and avoid sub-domains. Hopefully you are old enough to remember when websites like lycos.com were big and people could make their own websites. These were all hosted on subdomains like moz.tripod.lycos.com and because of this structure search engines needed to see subdomains as separate websites. For this reason they have separate grading, change the flow of link juice and can easily count as duplicate content.
Sub-domains are best utilized for information that is distinct enough. Like in the moz example Rands personal blog could theoretically sit at rand.moz.com as its a separate theme, different content, etc it would just loose out on the flow of value.
Once again Rob is right about using 301 redirects to move your subdomains into folders.
Now moving on to the more specific nature of your question "Are fourth level sub-domains any worse than third level sub-domains" I am going to suggest that when asking such a question you've already lost a big chunk of the SEO/inbound marketing battle.
The question you are framing is "I know it isn't good - but is it any worse?" Well even if it's not any worse you already know that it's not great and you should be taking structural steps to build on a sites accessibility, user functionality and it's SEO. If you find yourself asking "Is X any worse?" "How bad is Y?" "Can I get away with Z?" then you should immediately stop pursuing that idea and try and find a different method.
In this case that method is sub-folders and a 301 migration, but remember the framing of your questions and your over all directional strategy need to change to really drive home your campaigns!