How to prepare tasty tea on induction cooktop?

From what you are saying, my working hypothesis is that you are overheating your tea.

My first suggestion would be to forget all the modes of your cooktop (Pressure cook, etc.) and also the "degrees" scale. I have always found that a degree scale on an induction cooktop does more harm than good, since it has little relation to the actual temperature of your food. It is very obvious in your case: when a mixture of milk and water boils, it is at 100C, not at 65C.

So what you should do is to manually select the 120 W setting and try cooking with it. If it also requires you to select some mode from the lower row, then my guess would be that saute is indeed a good choice.

If using the lowest setting (the 120 W) doesn't work, there are two and a half other ways to make it cook slower. One is to make a larger amount of tea at once. The other is to place the pan farther away from the coil. A thin wooden chopping board might be enough for a test, but it might char with prolonged use, so if you are happy with that solution, you could try a pizza stone or a bathroom tile for permanent use. Don't use anything that can melt or catch fire, or anything that's made of metal. It is still best to combine that with using the 120 W setting - if you were to use something thick and a higher setting, you would be wasting energy.

The "half" way is to move the cooking vessel such that its bottom is only partially on the stove. It might not work at all, if the sensor notices that parts of the coil are uncovered, and if it works, it is inefficient and makes for badly cooked food. For me, it isn't worth doing it, but I am listing it here for completeness.

The observation that the heat comes in waves is perfectly normal, that's how induction stoves work (the technical term is "time modulation"). Without that, they would be much, much hotter (all the heat all the time) and the food would burn instantly.