Other than hand-coding, is there a way to promote the c4s to c3s and eliminate the false level?  I haven't used Archivist Toolkit or many other collection management software packages that might have this functionality.

I know you were looking for a way to do this without hand coding, but wouldn't it be relatively easy to open up the EAD file in NoteTab or some other text editor and Find and Replace the false levels?  If all the c3s are false, you could search for <c03 level="attribute"> and replace them with a blank space (to delete them all at once) and then search for all the <c04 level="file"> instances and replace them with <c03 level="file">. 

If you have a lot of finding aids to update, an XSL transformation like Dale suggested would probably be a better option, but the archives I used to work at used false layers as well, and in the absence of an XSLT specialist, Find and Replace in NoteTab worked quite well, as long as all the c3s were false.  We always made a backup when we worked with a text editor though, I think in NoteTab there is no way to undo a change after you save the file to see your changes...

Cheers,

Creighton Barrett