Using liquid sandpaper (deglosser) with polyurethane varnish
Yes, after sanding you can use the liquid deglosser for a final wipe down and cleaning prior to applying fresh coats of varnish. Using it alone in lieu of sanding is not a good idea IMO. 

Do not use it between coats, just give a real quick fine sanding (or steel wool) and wipe down with a damp cloth or tack cloth.

Use outdoors or with good ventilation as that stuff is a volatile solvent.