you can watercure it, but i used a pretty large amount of ABV when i did mine. it does make it taste less terrible.
hops and chamomile can both be done either as a tea or a tincture (soaked in everclear) hops are very bitter, so if you want to go the tea route, i recommend chamomile. it is very gentle and tastes nice too with a bit of honey or sugar added. good for digestion as well.
i will venture to say that almost all herbs will deliver more active constituents when tinctured as opposed to tea-ed. alcohol is just a better solvent for some things.
i am currently working on a chamomile tincture that will be evaporated down and then mixed with honey to create an elixir. hopefully this will help my 2 year old calm down when he has his cranky pants on, but i do plan to try some on myself, mixed with abv tincture. i have a feeling it will have a synergistic effect.
hops could be used too, but i avoid them because they can trigger depression in bipolar individuals like myself.
you could also try kava kava, lavender or passionflower tincture (don't make tea with kava, the high temps will destroy the kavalactones) for a chill feeling.
mint would be nice for flavor.