I entered US on B1/B2 visa. My I-94 expires in April 03 in the mean time I have applied and have been accepted by a school and my I-20 is in the process but is expected to arrive in early May. That essentially means that there would be a gap of about 3-4 weeks between my I-94 expiration and my I-20 arrival. I plan to apply for extention of my I-94 since I don't want to overstay and violate my visa terms but can I retract my I-94 extention in the mid process when my I-20 arrives, or what other remedy can I have besides leaving US and re-entering when I recieve I20. Please comment, any help is greatly appreciated.

Apply for extension,so you would not have problem in case your I-120 come late.

As Chrissy says, just apply for an extension but do so early enough, just incase there is a delay with the extension.