To preserve this effect with fewer readers, assign the roles of Narrators 1 and 2 to one reader, and 3 and 4 to another. In some scripts, particular narrators may relate mostly to particular characters. Notes at the start of those scripts will suggest positioning the characters near the corresponding narrators. There are many styles of reader's theater. Scripts are often set on music stands.
Readers look straight out toward the audience or at an angle, rather than looking at each other.
Though narrators look at the audience, characters most often look at each other. Scripts in sturdy binders are held in one hand, leaving the other hand free for gesturing. Exiting and scene changes are done more or less in the traditional way. These scripts should lend themselves to either approach, or to any other you might choose. There are rules in reader's theater, but luckily there is no one to enforce them.