The state selective, one- and two-determinantal versions of the recently proposed direct iterative approach to the solution of the generalized Bloch equation [H. Meissner and J. Paldus, J. Chem. Phys. 113, 2612 (2000); Part II] are applied to the ground and excited states of several test molecular ab initio models for which the exact full configuration interaction results are available. Both closed- and open-shell states of different spin multiplicity are considered, as well as the excited states belonging to the same symmetry species as does the ground state. The versatility and flexibility of this approach stems from the possibility of introducing the cluster expansion based approximations of highly excited clusters at various levels of the iterative scheme, leading to a sequence of approximations including both the configuration interaction and coupled cluster methods with singles and doubles as a special case. Both the reliability and the efficiency of these various approximations is examined, and potentially promising approximation schemes are identified.