2dogs,
Let me be upfront about this - I am an unabashed 223 fan, I have been shooting it since acquiring my first 223 rifle in 1970 and have literally fired tens of thousands of rounds of it. I can see my hits just fine with the 40 gr, I have shot the 223 enough that I am familiar with the drops and wind drift which may be a bit more than the 204 but not enough for it to be an issue.
The drop and drift is not all that much different between the 204 and 223 using 40 gr bullets until past 300 yards, and if you are familiar with the drop and drift from a 223 shooting past 300 yds is not really an issue.
Below is my experience with the 204 and the reason I choose the 223 over the 204.
I bought into the 204 Koolaid early on - I already had a Cooper Varminter in 223 then I bought an identical Cooper Varminter in 204. The first thing I noticed was that the recoil using 40 gr bullets was identical to the 223 using 40 gr bullets, in retrospect I should not have really been surprised about it though because the powder charge for the 204 and 223 are virtually identical, the bullet weights are the same, and the rifles were the same, including scopes, the rifle weights were within one ounce of each other. Still hopeful, I tried the 32 gr bullets and the recoil was slightly less but hardly enough to make a noticeable difference.
I used JBM Ballisics and ran the numbers on it and the recoil for the 204 and 223 with 40 gr bullets is identical, the recoil with the 32 gr is only a half-pound ft-lb less.
I chronographed the 32 and 40 gr bullets out of the 204 and was unable to reach advertised velocities with either of them, the 32's were less than 4000 fps and the 40's were right at 3750 fps from the 204, the same velocity I get from my 223 with the 40's. These velocities were using top-end load manual data, I know some folks will claim more but I will bet that they are exceeding load manual recommendations doing it.
The only way to get away from the recoil and rifle jump is to go to one of the smaller 20 calibers such as the VarTarg, use a break, or build a heavier rifle. With the VarTarg and similar cartridges you get into the lack of brass issue, the brass forming, etc. Too much trouble for me, I prefer to keep things simple and concentrate on trigger time instead. If I were to ever try another 20 it would be the VarTarg - that is where the 20 shines but then it less velocity, more drop and wind drift than my 223 has.
I sold my 204 bought more bullets and powder for my 223 and lived happily ever after.
Moral of the story - there are no free lunches.
drover