Hi,
Make a fool of myself (ignorance is bliss, until you publicly display how ignorant you are on a forum, which I will now do, then bliss turns into being trolled or just ridiculed)... Maybe M2 VDS rises as Iin rises, increasing due to its RDS x Iin, which in turn increases the voltage at the gate of M1, thereby turning M1 on more, which then draws/sinks more gate voltage away from M2, so M2 turns off more and M1 turns on more, and the end result is positive feedback. (I am not certain I understand the meaning of positive feedback here - positive feedback is usually not a desirable effect, surely?)
Or, maybe Iin increases M1 gate voltage by charging the gate capacitance more, with the same result of sinking more gate voltage away from M2 and so on.
Separately, why do you say M1 has infinite input impedance? - I do not think that is a realistic starting point, only a theoretical one of little practical use for real circuit analysis with this example - please correct me on that.