How can I make Shadows Over Camelot play better with 3 or 4 players?
SoC is one of my favorite games.  I'm going to assume that the answer you're looking for is how to make it easier for 3-4 players.  I actually quite like three to four players games as there are more interesting decisions, risks, and strategies to playing and winning.

To make it easier consider mixing and matching any of these:


Play without a traitor.  Even
with three players you're likely
playing with 8 loyalty cards, so the
traitor isn't likely to be in the
game anyhow.  Removing infighting
and suspicion will make the game
easier.
If you're using a
traitor, don't look at loyalty cards
until 6 swords are around the table.
REMOVE whole sets of fight cards from
the white deck (1-5).  In higher
numbers of players, the game is
easier partially because the knights get to cycle through the white deck making multiple use of special white and merlin cards
Only require two merlin cards to cancel special black cards
Do not play with the grail.  Remove all despair, desolation, and holy grail cards from the decks.  This focuses the number of quests onto a smaller number of knights for balance.  Plus it eliminates a 'boring' quest.  (Grail duty!)
Increase the starting cards and hand limits, allowing longer quests for the knights.