In Part I [Adaptive unstructured volume remeshing - I: The method, J. Comput. Phys., in press], we presented an adaptive remeshing algorithm that automatically adjusts the size of the elements of meshes of unstructured triangles (2D) and unstructured tetrahedra (3D) with time and position in the computational domain in order to efficiently resolve the relevant physical scales. Here, we illustrate the performance of an implementation of the algorithm in finite-element/level-set simulations of deformable droplet and fluid-fluid interface interactions, breakup and coalescence in multiphase flows. The wide range of length scales characterizing the dynamics are accurately resolved as demonstrated by comparison to experiments and to theoretical and sharp-interface (boundary-integral) numerical results. The computational cost is found to be competitive even with respect to boundary-integral methods. For the first time using an interface-capturing (level-set) method we successfully simulate the inertia driven impact and rebound of a liquid droplet from a liquid interface and find agreement with recent experimental results.