Multiple arguments using xargs.

Yes, find ./work -print0 | xargs -0 rm will execute something like rm ./work/a "work/b c" .... You can check with echo, find ./work -print0 | xargs -0 echo rm will print the command that will be executed (except white space will be escaped appropriately, though the echo won't show that).

To get xargs to put the names in the middle, you need to add -I[string], where [string] is what you want to be replaced with the argument, in this case you'd use -I{}, e.g. <strings.txt xargs -I{} grep {} directory/*.

What you actually want to use is grep -F -f strings.txt:

-F, --fixed-strings
  Interpret PATTERN as a  list  of  fixed  strings,  separated  by
  newlines,  any  of  which is to be matched.  (-F is specified by
  POSIX.)
-f FILE, --file=FILE
  Obtain  patterns  from  FILE,  one  per  line.   The  empty file
  contains zero patterns, and therefore matches nothing.   (-f  is
  specified by POSIX.)

So grep -Ff strings.txt subdirectory/* will find all occurrences of any string in strings.txt as a literal, if you drop the -F option you can use regular expressions in the file. You could actually use grep -F "$(<strings.txt)" directory/* too. If you want to practice find, you can use the last two examples in the summary. If you want to do a recursive search instead of just the first level, you have a few options, also in the summary.

Summary:

# grep for each string individually.
<strings.txt xargs -I{} grep {} directory/*

# grep once for everything
grep -Ff strings.txt subdirectory/*
grep -F "$(<strings.txt)" directory/*

# Same, using file
find subdirectory -maxdepth 1 -type f -exec grep -Ff strings.txt {} +
find subdirectory -maxdepth 1 -type f -print0 | xargs -0 grep -Ff strings.txt

# Recursively
grep -rFf strings.txt subdirectory
find subdirectory -type f -exec grep -Ff strings.txt {} +
find subdirectory -type f -print0 | xargs -0 grep -Ff strings.txt

You may want to use the -l option to get just the name of each matching file if you don't need to see the actual line:

-l, --files-with-matches
  Suppress  normal  output;  instead  print the name of each input
  file from which output would normally have  been  printed.   The
  scanning  will  stop  on  the  first match.  (-l is specified by
  POSIX.)

If I understand you correctly, you just want to insert the contents of javaoptions.txt into your java command. If so, xargs is no help. That's for running the same command on each line of output of another command. All you need here is

java $(cat javaoptions.txt) ClassName

Personally, however, I would write a function for this:

runJava(){
   javaOpts="-Xmx4g -Djava.io.tmpdir=/tmp/foo" ## random example
   java $javaOpts "$@"  ## run the java command with the options    
} 

Add that to your ~/.bashrc (or equivalent for your shell) and you can run:

runJava Classname

To run

java -Xmx4g -Djava.io.tmpdir=/tmp/foo Classname