We describe the properties of aluminum-nitrogen films prepared by dual ion beam deposition in which the metal atom flux is supplied by inert ion beam sputtering and the reactive flux is supplied by a low-energy (100-500 eV) ion beam directed at the growing film. This deposition technique and the analysis of film compositions are described in Part I of this two-part paper.The fundamental deposition parameters of arrival rates and ion energy are controlled and directly correlated to the crystallographic structure, microstructure, and morphology of the films, over a range of composition from N/Al=0 to N/Al=1.0. Al sputter deposited in a mixture of Ar and N2 forms an expanded Al lattice with no indications of AlN formation. When the low-energy N +2 beam is turned on, almost all the ionized nitrogen is incorporated in the film forming a mixture of large Al grains and fine grained AlN. In this two-phase cermet region, the resistivity shows a percolation threshold at N/Al=0.45, becoming fully insulating at about N/Al=0.75. Above the arrival rate ratio N/Al=1, excess N is rejected and the films have AlN structure. For stoichiometric AlN films the texture and microstructure depend strongly on the N+2 flux and ion energy. For low ion energies (100 eV) and flux, films are formed with the c axis of the hexagonal AlN structure perpendicular to the film surface, whereas for high ion beam energies (500 eV) the c axis is close to the plane of the film. The AlN grain size also increases with nitrogen ion energy. The relative contributions of chemical driving forces and ion bombardment processes are discussed.