Gosh, I don't know...My maltese was spayed when she was 2.9lbs and everything came out okay. It sounds like she Needs the luxating patella surgery if she's in pain. Grade 4...I can imagine would cause her pain, especially if she holds it up. My opinion is that you find a vet who you feel is experienced with small dogs and talk to him/her about it. If he/she is confident in what they are doing, I don't see why you shouldn't go ahead and get the surgery done. Not all vets are in it for the money, many of them actually love what they do and work to help the animals
Good luck!