No, the spell is appropriate for 3rd level
Your question lists a lot of potential upsides for the spell, but makes no attempt to compare it to other spells at 3rd or 4th level to justify the opinion that there’s somehow something wrong with where the spell is situated.
Let us rectify that.
Fear 3rd level, affects a large area. Creatures failing the safe are both disarmed and effectively taken out of the fight until they run away so far that they can’t see the caster anymore (potentially very far depending on where this is being cast) or the spell ends.
Fireball 3rd level, affects a large area. Kills things in it.
Slow 3rd level, affects a large area. Creatures failing the safe are still technically in the fight, but very weakened. Creatures can repeat the save. Unlike both of the above spells (and Hypnotic Pattern), it is selective so there is no chance for friendly fire.
We can see from these examples that a spell that affects a large-ish area and conditionally takes multiple creatures out of a fight is appropriate for a 3rd level spell. Hypnotic Pattern doesn’t stand out as particularly powerful in this regard; Yes, it can potentially take out a large-ish number of creatures out of a fight but so can any of these other spells. In fact, Hypnotic Pattern is functionally nearly identical to the 1st level Sleep spell, except that it affects all targets in the area equally, which isn’t even always an upside, and it works against creatures who can’t be magically put to sleep.
Meanwhile for 4th level spells we have Banishment and Polymorph, both of which can take a target out of a fight entirely on a single failed save unless the casters concentration is broken.
Honorable mention also goes out to Hold Person which is a 2nd level spell which can also take targets quite effectively out of a fight, and while it does allow multiple saves it is not broken by the target being attacked, and paralyzes the creature for the duration which confers additional benefits over merely removing it from the fight for some amount of time.
Hypnotic Pattern is not a bad spell of course, but even as a 3rd level spell it is not picked that often. There is really nothing warranting upping its spell level. Yes, it is very good in certain circumstances. But that is true for all spells which aren’t bad!