I think if your H1 based I-94 is expired in Aug 04, you are no longer in non-immigrant status. In order to re-gain H1/H4, you/spouse will need to leave US and obtain a visa stamp at overseas consulate and then re-enter us and make sure to show H1 to get your I-94 stamped with H1 statues. To be in a safe side, I were i would make sure that I had a valid AP (just in case , if the consulate does not stamp your passport with new H1/H4).
I know this sounds a lot of trouble and extra cost..I think it also depends how comfortable /"bullish" you are about prospects of your pending I-485s ..If you/your lawyer believes that you got a very strong case, may be, you should let it go.
It would not heart to get a good advice from reputable lawyer (in case, you did not have one already).