White Noise Storm by Ray (Arsen) Arachelian is a very versatile steganography application for DOS. Embedding M1 in the containers C1 and C2 was rather trivial and no degradation could be detected. White Noise Storm was the first software tested that could embed M2 into C1 - notice the "noise" interfering with the image integrity.
The image on the left is the original C2. The image on the right contains message M1: