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
You can change the used Maven instance in Windows->Preferences->Maven->Installations. But I'm not sure whether this will help as a comment below that setting says that dependency resolution will still be done with the internal Maven installation.
If I were you, I would try to add that local repository to the list of known repositories. Use Window->Show View->Maven repositories (this is sadly not visible in the preferences).