Following the success of Gold, in 2002 Adams was blocked by his label from releasing his choice for a follow-up album. This would be the second time, the first being with Gold; Adams had recorded "the Suicide Handbook" which was rejected on the grounds that it was "too sad". The label opted this time around to cherry pick (without Adams' involvement) from four of Adams' recorded albums it had already dismissed as unreleasable (48 Hours, The Suicide Handbook, The Pinkhearts and The Swedish Sessions) to create Demolition, released in September 2002. Although the album garnered him more critical attention, it failed to sell as well as Gold. The same year, Adams produced Jesse Malin's first album, The Fine Art of Self Destruction, and later worked with Malin to form the punk-rock group The Finger (under the pseudonyms, "Warren Peace" and "Irving Plaza" respectively), who released two E.P.s which were collected together to form We Are Fuck You, released on One Little Indian Records in 2003. He also starred in a Gap advertisement with Willie Nelson, performing a cover of Hank Williams's "Move It on Over".
In May 2002, Adams joined Elton John on CMT Crossroads, which brings together country artists with musicians from other genres. During the show, John referred to Adams as "fabulous one" and spoke of how Heartbreaker inspired him to record Songs from the West Coast, which at the time was his most successful album in several years. Also in 2002, Adams reportedly recorded a cover of The Strokes' debut album Is This It, though it has never been publicly released.
In 2002 and 2003, Adams worked on recording Love Is Hell, intending to release it in 2003. Lost Highway Records deemed that it was not commercially viable and was reluctant to release it, leading Adams to go back to the studio. Two weeks later he returned to Lost Highway with Rock n Roll, which featured guest musicians including Melissa Auf der Maur, Green Day's Billie Joe Armstrong, and Adams's girlfriend at the time, Parker Posey. Adams' songwriting received additional exposure when Joan Baez included his song "In My Time of Need", from his debut release, on her 2003 album Dark Chords on a Big Guitar.
At a concert in October 2002, at Nashville's Ryman Auditorium, someone in the audience yelled out a request for "Summer of '69", a hit by the similarly-named Bryan Adams. Adams reacted with a stream of expletives, and ordered the house lights turned on, The Tennessean newspaper reported. He eventually found the fan who made the joke request, paid him $30 cash as a refund for the show, ordered him to leave, and said he would not play another note until he had left. In a 2014 interview, Ryan Adams denied that the audience member was asked to leave "for screaming a Bryan Adams song", but rather because the man was drunk: "The reason why the guy was asked to leave by me was because I was doing an a capella three-piece with Gillian Welch, David Rawlings, and myself of 'Bartering Lines,' and in between the quiet parts the guy was screaming." In April 2015, Ryan, who had since become friends with Bryan, played "Summer of '69" at the end of another performance at the Ryman, an act described by Rolling Stone as "an olive branch to the city that was once his home."