I'd also lean towards keeping compose a separate binary, particularly given the community's concern over Docker's feature-creep, and the fact that it uses a separate configuration file, and doesn't need to be the same binary for any particular reason.

Also, I filed an issue on the Github repo for this, but "machine" is already used by a command line tool on OS X and other BSDs.

Perhaps "docker-machine" and "docker-compose" are good compromises in both cases.