Here it is as a Swiss Army One Liner.

First idsfa's golfed to 85 keystrokes:

perl -pi -e 'split/\t/;map{$_.=q/ /x4;substr$_,0,4*int length($_)/4}@_
+' filename.txt
[download]

And atcroft's golfed to 78 keystrokes:

perl -pi -e 'while(/\t/g){$d=(4-pos%4)%4+1;$x=q/ /x$d;s/\t/$x/}' filen
+ame.txt
[download]

...both in convenient one line form for your tab-conversion-pleasure. ;)

Fun exercise. Thanks for the snippets idsfa and atcroft. You guys had working versions while I was still working out the logic on mine (which never saw the light of day).