Ive heard that the shorter barrels on the M4's underpower the 5.56 round.is this true?
You'll obviously lose velocity as EZ said. That does translate to the rounds not fragmenting as much or at all if it gets slow enough either due to the inherant loss of velocity or just from the distance and slowing below proper fragment speeds.
But are you really concerned about that?
Re: Switching to 77 grain slow boolits that cost more and still fragment at the slower speeds (to a point) due primarily to the thinner jacket, I don't think I'd waste my time with that. They'd be good if all you needed to penetrate were flesh, but overall I wouldn't consider the tradeoff worth it.
So are you wanting something that's just got the look of an M4 or are you wanting M4 performance in total including using milspec ammo, etc... what are your concerns?