  We analyze an experimental method for creating interesting nonclassical
states by processing the entanglement generated when two large coherent states
interact in a cross-Kerr medium. We specifically investigate the effects of
loss and noise in every mode of the experiment, as well as the effect of
"binning" the post-selection outcomes. Even with these imperfections, we find
an optimal set of currently-achievable parameters which would allow a
proof-of-principle demonstration of number squeezing in states with large mean
photon number. We discuss other useful states which can be generated with the
same experimental tools, including a class of states which contain coherent
superpositions of differing photon numbers, e.g. good approximations to the
state $\frac{1}{\sqrt{2}} (|0\rangle+|20\rangle)$. Finally, we suggest one
possible application of this state in the field of optomechanics.
