I believe I used my 1/4x3/16 vnotch to set the shower floor over kerdi. My tiles were 2x2 porcelain. I don't think 1/8" grout lines are too big. In fact, with the 4x4, I would recommend it. Depending on the finish of your tile, there is the slip/fall factor in the shower. Smaller tiles (i.e. more grout lines) provide the necessary traction to prevent slipping.
If that doesn't work, I'll always think it should have.