Are there any other sentences with more 'variables'. The possible variable sizes are interesting and it makes me wonder if there might be more variable relationships that could help (for example, W1 = W2 + W3).
As far as W3, the only thing I can think of is to play with the relationship between W2 and W3 and change the spacing. So if you say W2=CART and W3=HAT, you could change the spacing when placing them in the sentence and come up with CAR THAT. The reason I asked if there were other possible variables is that W1=CARTON works well for the whole sentence and the word CARTON breaks into CART (already used for W2) and ON.
W4 could be any word that works but I guess INSTANCE fits the best and I like it since the word also naturally breaks into 2 other words (IN, STANCE)