So, I just thought I would lay out the facts, and see what you all thought...
The original case for S4:
1. Dean is TORTURING without batting much of an eyelash about it. Hell, even Sam is on board (that's very S4+ Sammy.)
2. I'm pretty sure in S3, Sam and Dean were still in the "avoid Lilith" strategy right up until No Rest For the Wicked, which was the first time we saw them actively go after her.
3. courtesy of borgmama1of5 - In the teaser we get two shots of Dean's eyes in Hell from the end of 3.16, so I am going with this flashback was in season 4. (We also get Lilith from S4 clips.)
ETA: 4. If Dean was interrogating the demon about Lilith and Dean's deal...then Jeffrey should have expected Dean to be dead, not alive. So, that's a point in favour of S4. Instead he mentions how Dean wanted to "save the world", which would make sense in terms of S4. (liliaeth) Also, Jeffrey says "or should I say it killed you" - which could mean that Jeffrey knows Dean has died once before, a fact that he could have only found out during his original possession. (borgmama1of5)
ETA: 5. According to Todd Aronauer (producer), the scene took place after Dean learned how to torture (source). That's a pretty goddamn strong vote in favour of S4.
The new case for S3:
1. It was most likely set between 3x15 and 3x16. They learned Lilith's name from Bela at the end of 3x15 and were easily that desperate for information on Dean's contract holder. Dean tortures a demon rather thoroughly at the beginning of 3x15 actually. (monicawoe) (I have checked the timeline, and she's spot on here...it fits in perfectly between 3x15 and 3x16.)
2. That was NOT season 4 Sam. Season 4 Sam was a very different animal, and would not have shown even a hint of intimidation. In season 4 his whole posture was different. (monicawoe)
3. Weaponry: Dean does not use Ruby's knife. In S4, it was a regular tool of theirs - and Dean definitely would have brought it with him as an implement of torture. They did not acquire Ruby's knife until 3x16, which means that monicawoe's setting of the story between 3x15 and 3x16 holds water. They know Lilith holds Dean's contract, but they do not have possession of the demon-killing knife yet.
4. Dean's attitude towards torture:
"In On the Head of a Pin, Dean had SUCH an issue torturing Alistair for information. It's always struck me how, in S6 for example, he's so cavalier about doing it now when back then it was so much harder for him." - morganlucas41
"I'm thinking it has to be Season 4, but then I'm wondering why Dean is so cool with torturing-in The End he was mad at his future self for torturing people again. Back in season one (with Meg) Dean wasn't that opposed to torturing (demons) if it had to be done, but after Hell and Alastair he really didn't want to do it again." - katsheswims
5. Sam is wearing a crew-neck white t-shirt, a light blue shirt, and a beige jacket. I kinda breezed over the wardrobe in my first watch, but on my second watch, I couldn't ignore it. The whole outfit SCREAMS S3 at me. By S4, Jared had bulked up to the point where he favoured v-necks. Also, Sam tended to wear darker colours in S4, far less light blue, far less white t-shirts.
6. In the flashback, there is this exchange:
Dean: "You ain't the first demon we've tracked down on this safari"
Sam: "That's right, as a matter of fact, I think you put us over half a dozen"
Now...ONLY a half dozen demons? In S4, I'm pretty sure they went through way more demons than that - and Dean wasn't interrogating them...that was just killing. In S3, however, 3x15 opens with them torturing a demon for information on Dean's contract...that could have been one of the half dozen, especially given that in S3, the month of March is largely unaccounted for.
7. Why would the writers acknowledge "the year that wasn't" now? They've ignored that year between S5 and S6 so consistently until now, I really don't think they'd start paying attention to it now.
So, yeah, as you can see...S3 is winning by a landslide. It just fits better. When I go to my timeline and try to wedge in these events, they fit perfectly into S3, and they don't fit at all into S4...seriously, try to figure out what episodes they would fit between in S4 and still have those episodes make sense? Whereas it slots in between 3x15 and 3x16 perfectly.
Really, tonight, it was looking at Sam's outfit that really did it for me.
And on that note: Did any of you realize that Dean was wearing the Red Plaid Shirt of Angst!?! I love that shirt!
ETA: S4 has made a comeback in comments!! I am, once again, undecided (though I still maintain that Sam is wearing a S3 outfit through and through.)