IIRC the M60 uses the same input voltage range as the M61 ... 3.4v minimum to 9.0v maximum. A freshly charged 18650 runs around 4.0-4.1v & the M60 will stay in regulation as the voltage drops to 3.4v. Below 3.4v the module goes into direct drive (no voltage compensation) & you can keep running the light until it goes out but it will dim down as the voltage drops.
An 18650 is perfect for the MD2. I have a 3100 mah which is a little fatter than normal (a little fat for my bored 6Ps) but fits perfect in my MD2. I'm sure as these batteries get bigger (fatter) in capacity it wont be a problem fitting on the MD2. Like PW said once it goes below 3.4 the M60 goes into regulation, but I always thought I was good to charge your battery around 3.8 anyways.
Yes, the M60's match up well with a single cell, and also have a very long tapered output, no worries about the light cutting out unexpectedly from a low battery.