Hi L.,
At 4 months old, I gave my son 1 tbsp of cereal a night before bed. It was usually around dinner time I gave it to him. With nursing, perhaps you could express some milk prior to feeding him the cereal, mix it with the cereal & then when he finishes, nurse him as a 'reward' for eating like a big boy. Eventually he will probably tell you if he's hungry and wants an additional feeding (it was maybe 2-3 weeks later he wanted more of that neat stuff!!!!)
As for losing weight, I would bring that up to your pediatrician. If he/she is concerned, then you should be. However if he/she feels this is normal for a 4 month old when beginning to nurse less and eat more solids, then you should have a little more confidence that you are doing what is right/best for your son.
By the way, my son is 13 months old, I was there not too long ago.
You've gotten some great advice so far.