I understand the argument of having two very similar cars (1M and M2)... but if that smaller sports coupe is the car style that hits all the right buttons, why would I NOT want both? We all know they are similar but different in great ways.
The practicality of the M3 is undeniable if $$ is no big deal - but too many people claim they are boring.
That's a lot of money for more luxury/space and similar performance to the M2. I'd claim it's a waste of money if it doesn't feel fun. If it does, great, you're set!
I would rather DD an old E46/E39 wagon or E46 ZHP and load up on the M cars (1M, M2, E46M, E36M, M coupe) for every other day I don't need to haul people/things. At the end of the day, almost every M car is a fantastic DD.
Drive the 1M! You only live once. This is a great problem to have!