There would be no compromise of "user experience" if this 4" had 4K hardware. It would still play 1080p and 720p and SD to it's maximum. It would not force anyone to ONLY utilize 4K content or buy a new TV or throw out their current TV, but it would give an easy Apple solution to playing 4K shot on iPhones on 4K TVs for those who already own the latter. iPhones now shoot and play 4K but that has no effect on the iPhone "user experience" either- it's just
something else that it can do beyond the "status quo."
I could write a bunch about "chicken & egg" here: what motivates the content creators to make 4K versions of their content available until there is a reasonable chance of profit by there being millions of hardware boxes in homes ready to play that 4K? Or shorter: the hardware MUST LEAD. We did not have BD discs before there were BD players. We did not have DVD discs before there were DVD players. We did not have SVHS or VHS or Beta tape before there were SVHS, VHS or Beta players. Why? Because software before there is hardware that can play it makes no sense at all- it just sounds good in trying to rationalize in support of why Apple still clings to 1080p when pretty much the rest of the players are already offering 4K.
The hardware must come first. The software then either accompanies it or follows. EVERY SINGLE TIME- no exceptions.
How many apps that exclusively run only in iOS10 on iPhone 7 are already for sale in the iOS store? None. Well why not? Shouldn't Apple be waiting on developing the iPhone 7 and iOS10 until there is a multitude of apps ready to take advantage of that unique hardware & software? Of course not. And same here. Hardware first, then software. Hardware sets the bar for maximum potential, then software can exploit that max potential. It is impossible for that to work the other way.
Even more simple: wave our magic wand and add 4K versions for

TV for every single video available in the iTunes store right now. How much money can be made on those videos? Not a cent. Why not? See above.
And while the "4" does have a chip inside that is known to be able to play 4K, 4K
commercial video requires a HDMI standard that is not built into this "4"... and that is apparently not able to be addressed with any kind of software update. Thus, 4K for
commercial video will require an

TV5.