If you go for the 4" over the axle pipe, perhaps a chambered (oval case) muffler will do the job. From what I've been able to tell, there's greater choice regarding airflow vs hearing loss. Just be wary of 4" mufflers that have 2 1/4" internals. Apparently that's a common practice.

 

When I fabricate my "catalytic muffler" (home-made muffler of my design inside the cat converter case), I will be using stainless steel scrubber pads (no soap) that I bought at the dollar store - similar to these. They are similar to the curl that would come off a lathe if you were machining stainless steel.

 

Just to add in... 4" is inherently loud. I'm running Dougs longtubes into a 3"-to-4" merge, and then a single 4" from the tail housing back (Mufflex with a home made Y basically). I'm pushing it through a Spintech muffler, which while is better than something like a Flowmaster, is still basically a chambered exhaust. It's definitely quieter than open pipes, but beyond 1500 RPM or so it's still pretty damn loud. I scared my children when I revved it after finishing the exhaust.