Two-photon excitation of a three-level atom in a ladder configuration (1-->
2-->3) by simultaneous illumination with fields in squeezed vacuum and cohe
rent states results in quantum interference for the excitation process. The
particular configuration considered here is one for which the signal and i
dler output fields of a subthreshold nondegenerate optical parametric oscil
lator are in resonance with the two-stepwise dipole atomic transitions (1--
>2,2-->3), while a "reference oscillator'' field is in two-photon resonance
with the quadrupole transition (1-->3). In an extension of the work of Fic
ek and Drummond [Phys. Rev. A 43, 6247 (1991)], a theoretical formulation b
ased on the full quantum master equation for the problem is presented. The
combined effects of quantum interference and the nonclassical character of
the squeezed state are investigated, and offer the potential for a new dete
ction strategy for quantum fluctuations of the electromagnetic field with u
ltrahigh frequencies (10's-100's THz). Based on the theory developed, we an
alyze quantum interference in excitation in several special cases relevant
to experimental realizations, including the effects of a small focusing ang
le of the squeezing onto the atoms, and unusual population inversions. Spec
ial emphasis is given to identifying intrinsically quantum optical field ef
fects versus classical field effects. Procedures that could distinguish bet
ween the two (i.e., classical and nonclassical) are suggested. [S1050-2947(
98)06109-5].