Would definitely recommend dropping a 4th subject, especially if it's something that has nothing to do with PPE (i.e. chemistry). Not only are you effectively cutting your workload by 25%, but you get more time to study for your other three subjects.
From my own experience, three A-levels (history, maths, physics) were definitely enough to get an offer, and not having the fourth means I am a lot more likely to meet my target grades. If I had carried the fourth on (german), I'm pretty sure I would at this point be purposefully ignoring it for the sake of meeting my offer for the other three , and to me it feels pointless to do an A-level if I would get a bad grade anyway.
Definitely don't just pick up an EPQ because you feel like you have to if you're dropping an A-level - that's not necessary either! However it of course is a great opportunity to closely analyse something you're passionate about, and it can be a good thing to put on your personal statement.
Still, though, the most important things seem to be meeting the minimum grade requirements (so you can apply & do the TSA), then getting a good TSA section 1 score (so you can get an interview), and then really showing in interview that you are right for PPE/Oxford. At no point in this process is a fourth A-level necessary (or even helpful!), and an EPQ probably isn't too helpful either. As Oxford have an admissions test AND an interview to base their decision off of, the personal statement - with which you might have had masses of help - comes pretty low in their criteria. You might get a chance to talk about your EPQ in interview, but only if it's relevant - definitely don't just shoehorn it in because it's something you can talk about!. Interviews change from college to college and from year to year, but in mine, they asked everyone the same preset questions, and absolutely nothing about personal statements/own reading/EPQs/whatever.