Hi, not sure if you have already picked something, but I can tell you that when I started out I bought a Celestron Firstscope and can give you a fairly good review as I used it non-stop for quite a while until upgrading!
To a 4 y/o, this scope would look "cool"; it's easy to store and carry (although sounds like you might need to keep it away from him whilest not in use!); I've had people look through it (at the moon) and said "wow!" At his age, to be honest, the moon is the only eye-catching thing for him to look at (and maybe Saturn - which, with the right eye-pieces, you can see through a scope this small - when I say you can "see Saturn", it is minute - but the rings are there!) The negatives: well, it's not an 8" telescope, so the views aren't wonderful and even though it's little, it's still hard to find stuff and would be quite difficult for a 4 y/o to work - but I imagine that would be the case with most telescopes to be honest! And that brings me to another idea:
if you are interested in astronomy too, a little kid could easily enjoy looking through a 6" or 8" Dobsonian with your help and you get the bonus of getting magnificent views yourself! Oh, and a 6" Dob is not really that much more than your budget either! Decisions, decisions!
