I know what you mean, bro.  I can get down to a GI compass pouch, but I feel like a lot is left out.   I have become a dedicated fan of Fat Boys.  The ergonomics are so good - at least on my body - that it is more comfortable than the M2 would be threaded onto my belt.  
I would think that the M2 would not be too bothersome, I mean, it's smaller than a GI conteen, for example.  'Course, I don't know how you are carrying water.  
I've never been a big fan of fanny packs, but the Maxpedition Devil Dog looks promising  -- it converts to a shoulder bag, which I am quite used to, anyway.  
Any Devil Dog users out there?