This animation by Aleksander Erstu demonstrates a way how the liquid interpolation of 2D animations could work.
I am planning on researching the area and developing a working algorithm for my Master’s Thesis in Software Engineering.
This is a demonstration of the algorithm that I use for liquid simulation: http://www.grantkot.com/MPM/Liquid
It uses Material Point Method: http://en.wikipedia.org/wiki/Material_Point_Method
This is where I got the C++ code for the liquid simulator: http://code.google.com/p/mycodeplayground/
The algorithm is based on the following research:
Early prototype work in progress: