Pour milk and water into a medium microwave safe bowl that has at least 1-2 inches of space at the top. Microwave on high for 1 minute, or until mixture is 110°F or hotter. Place tea bags (unwrapped) into the liquid to steep for 15 minutes. When ready to remove, wrap each tea bag around a spoon to make sure that all of the liquid (and flavor) is in the liquid.
Preheat the oven to 350°F and line 2 muffin tins with 24 cupcake liners.
In a large mixing bowl or a stand mixer fitted with the paddle attachment, cream the butter and sugar until fluffy, approximately 1-2 minutes. Beat in the eggs, one at a time. Add the tea mixture to the cupcakes.
In a medium bowl, sift together the flour, baking powder and salt. Gradually mix into wet iced tea cupcake mixture until just blended. Do not overmix.
Spoon iced tea cupcake mixture evenly into 24 cupcake tins. Bake for 22 minutes or until tops are lightly browned a spring back when pressed with your finger. Remove the cupcakes and allow to fully cool before frosting.
In a large mixing bowl or stand mixer fitted with a paddle attachment, cream the salted butter and butter flavored shortening until fully mixed and creamy. Add the lemon extract and lemon zest. Gradually add powdered sugar until lemon frosting reaches a spreadable/pipe-able consistency. If you accidentally add too much powdered sugar and it gets too thick, thin out with a teaspoon of water.
Using a piping bag with a large round tip or large star tip, frost cupcakes. Garnish with sparkling sugar, sugared lemon wedges and lemon candy sticks.
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