In X1 it was practically just a better grenade that took a couple more time units. The low weight made it so there was no reason not to give a stick or two to all of your soldiers.
A simple solution would be making a C4 'secondary weapon' in how the new inventory will work instead of a belt item. A really powerful and more versatile single use grenade might not be too unbalanced, especially when you have to sacrifice a sidearm for it.
This would also limit how much you're able to blow up in a single ground mission. Which has pros and cons of it's own.
Alternatively, changing it so you can't throw it anymore would fix all of the problems it had too. It would still fill the roles of creating breaches, exposing hiding aliens, and knocking down buildings. It just wouldn't also double as a 'heavy' grenade.
It would still be possible to use it offensively by running up to the aliens and dropping it, but you'd probably lose the soldier as well.
I think it would be better as a belt item if this was done. Making it unthrowable and a secondary weapon would be too harsh on it.
Even more alternatively. Removing it entirely and giving C4's destructive abilities, maybe with lower damage, to the grenade launcher would force players to have a potentially very vulnerable soldier if they want the ability to blow up more than a 3x3 square.