Hallo Martin,

first, fabricate a voltage between 0-2V, using PWM. Then, use AD694 to make a current of 4-20mA from this.

To the PWM-filter:
With such filters always a compromise must be choosen between settling time and ripple. If you use a single pole RC low pass filter, then time constant 'tau' = R x C determines how fast your filter will react, when the input signal is changing. So, small 'tau' is wished. But with small 'tau', ripple is rather high. Assume PWM period is T, then exp(-T/2/tau) is the relative change of output signal during a period, when duty cycle is 50%. To keep the ripple small, 'tau' should be much bigger than T. If 'tau' = 100 x T, then output signal will vary by about 0.5%. So, 'tau' should be even bigger than 100 x T, if an 8bit PWM is used.

More sophisticated low pass filters, like two pole active filters, help to decrease ripple, while at the same time minimizing settling time.

Kai