1x and 4x decoding affect which edges the FPGA counts, but not the reported distance. When you select 4x, WPILib scales the output to be the same as 1x, ie if DistancePerPulse is 1, in 4x you would get values of 1.0, 1.25, 1.50, 1.75, 2.0, and in 1x you would just get 1.0, 2.0, etc.
The FPGA measures rate by timing successive pulses. In 4x decoding, the next pulse is from the opposite channel, which means that you will see a lot of noise. If you look
phase relation specs for the the E4T, the relationship can vary by up to 60 degrees, which means you could get 2/3 of the measurement as noise. It's much better to use 1x decoding for rate, so the same edge is always being counted. It's also better to use a lower resolution encoder, so that there is a longer time period between pulses.
This is based on using the roboRIO for decoding the encoder. If using the Talon SRX, the opposite applies, it's rate algorithm wants a very high resolution encoder (although this might not be an issue with the 2.22 firmware).