Philador Transposition Question

Here is the problem.

1.e4 e5 2.Bc4 Nc6 3.Nf3 and we have reached the Italian Game.

3...d6!? and now my opponent transposed into the Philador.

I have had problems with the pin on my King's Knight, and 4.d4 seems to be met by 4...Bg4. 

What should I play against 3...d6? 

Maybe 4.h3 and if 4...Nf6 5.d3?

4... Bg4 scores really well for white, I mean really well. I'm pretty sure it isn't a move to fear, rather, you should imbrace it.

But I'm not sure why, since John Watson in his book "Mastering the chess openings volume 1" doesn't go into that variation, so I wouldn't be able to explain why it's bad. Except for the normal reasons why a premature pin on the kings knight might explode up in your own face.

I'm probably missing something, but I don't see a problem with 1. e4 e5 2. Nf3 Nc6 3. Bc4 d6 4. d4 Bg4 5. h3.  If 5... Bxf3, Qxf3 doesn't lose the d4 pawn because it threatens mate on f7. If 5... Bh5, you can either take on e5 or push the d-pawn to d5.