Xan, welcome. Yes, the M2s would certainly be fine in a very small room like that when supported by a sub, and you'll continue to use the Yamaha sub until the next purchase. When you do get a new sub, you might consider something a little more powerful than the 125, even for the small room.
Both of those receivers are fine, but yes, it'd be better to make the next buy a speaker and continue to use the Yamaha receiver. A set of QS4 surrounds or the new sub would be more beneficial.
The M2s would provide a very well-balanced sound in that room when a sub adds bass to fill in the bottom end. There would be no "brightness" which wasn't already in the program material being played at the time. The M2s have an accurate flat response above the low bass, not an elevated harshness. You might be interested in this recent
competitive review against some rather more expensive rivals, where the M2s were found to be "least colored" and the reviewer concluded that Axiom had "knocked this one clear out of the park".
