First, kill off Diggle and Felicity because they're really lame. (I was hoping that would happen at the end of season 3, but whatever) The show needs a shot in the arm, and I think they need to shed the dead weight.
So anyways, Diggle and Felicity are killed, (ideally we pick up several years afterward) and Oliver has become addicted to crime-fighting, trying to solve their murders, make up for their deaths, whatever, and he's become a bit unhinged, hair and beard grown out and all. He doesn't kill anyone, but he seems to get off on catching bad guys and shooting them with as many arrows as he can. He's become sarcastic and bitter, bringing back a bit of that sharp tongue he had as a dumb kid which he's been suppressing since the island. He's lost all his money and lives off nothing. He's too ashamed for whatever reason to come to anyone for help. He wears a new costume and goes by a new name for obvious reasons, but he quickly discovers that most people still reckon the Green Arrow is Oliver Queen. Things are somewhat repaired with Lance, who takes pity on Oliver. He still keeps away from the cops though.
While living like this, he starts to see more of the social inequality in his city, etc. He gets flack from random people in the street often, with some people blaming him for the sins of the Queen family, some for the sins of the Arrow, etc. Queen Consolidated is linked with HIVE and specifically Damien Darhk who turns out to be engineering the disparity in Starling for whatever reason, which is what Robert Queen wants Oliver to fix, and it's what Malcolm was all about fixing in season 1 in his own way. It's revealed that Merlyn killed Felicity and Diggle in order to get Oliver back to work in Starling in order to bring down Darhk, since Oliver is essential for some Queen bloodline reason. Malcolm is the final showdown and the ultimate test of Oliver's will and restraint.
At some point he's visited by the Green Lantern, Hal Jordan (who he first met after leaving Hong Kong). Oliver discovers that Roy has become a junkie. He loses his arm later and gets a badass robotic replacement.
Laurel is still crime-fighting, and she eventually finds Ollie on the streets. He's very evasive, but after finally coming face to face when he comes to her aid, she cleverly convinces him that the only way she's going to be safe is if he trains her (though she mainly just wants her friend to get back on the right track), so through training/crime-fighting (and strictly only this at first) they end up reconnecting and eventually falling in love again. Before Detective Lance is killed in the finale, he gives Oliver his blessing to marry Laurel.
The season is about Oliver forgiving himself for his friends' deaths, moving on, becoming a more positive person, learning to love again, etc. To get cheesy for a sec, while in the flashbacks he has to become a darker person to escape back to Starling, in the present, he's back on his own desert island, and he needs to find the light again to escape it. By the end we have someone resembling the more life-arming social crusader from the comics.