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In Part I of this three-part study, it was shown that novel quantum states, called two-photon coherent states (TCS), have significant potential for improving free-space optical communications. Because TCS radiation does not possess a classical analog, i.e., its diagonal -representation is highly singular, the semiclassical conditional Poisson process model for direct detection is not applicable to TCS reception. In this paper, photoemissive detection of arbitrary quantized radiation fields is studied with incorporation of the nontrivial effects of detector quantum efficiency. General theorems are derived permitting the application of classical point process results to the detection and estimation of signals in arbitrary quantum states. These general theorems are applied to determining the performance of TCS optical communication systems that employ direct, heterodyne, or homodyne detection in binary decision as well as in linear modulation problems. It is shown that the use of TCS radiation with direct detection or heterodyne detection results in minimal performance increments over comparable coherent-state systems. Homodyne detection, however, can achieve the full TCS signal-to-noise ratio improvement predicted in Part I of this study. The increase in homodyne signal-to-noise ratio obtained by use of TCS radiation yields significant performance gains in both linear modulation and antipodal signal detection.