I have dependencies installed local on my machine (~/.m2/repository/blah/blah/blah) and m2eclipse is not recognizing them as there - I think m2eclipse is using its own maven ins
I had the same problem, and this is what worked for me. Using Eclipse Indigo:
Windows->Show View->Other
In the pop-up: Maven->Maven Repositories
Once the view is displayed, right click on the appropriate repo, and select "Rebuild Index"
Wait a few seconds and done!