Tanning is too strong.

100% agree. I had Knox Greenburg sunbathe and he ended up a completely different ethnicity. Had to go into CAS to temporarily change his skintone until the tan went away.

But I have to say, that tanning shown in the OPs first post, might be a bit extreme but it is absolutely possible! Though it doesn't happen like that in just a few hours, I have seen people (including myself) getting incredibly darker after long exposure to the sunlight. I lived in Greece as a kid and the sun shines there the whole summer long, after 4-6 weeks of daily exposure you do end up looking like you changed ethnicity.

Like the rest of the we only care about dark skin tone update the tans seem to be made for the darker skin tones and the lighter skin tones get what they get without any thought put into it.

Tanning does need to be toned down, especially with the time it takes to get one in TS4 and the result you get is far too strong.
They should keep it to a simple holiday tan.

If we consider current result 100%
I'd say 50-70% would be fine, perhaps with some randomization or two stages. I'd also like it if it took a bit longer to get. If they could do a gradual system I'd be overjoyed.

I also wouldn't mind it too much if sims got get tans outside of deliberately sunbathing to make it more meaningful to their look and what they've been wearing when they get it. Don't make a sim get it no matter what just because they've went out but maybe if they've been out for quite a while on a particularly sunny day.