Look at thh 1040-NR-EZ instructions for Form 1040NR-EZ page 4-5, "Amounts received in the form of a scholarship or fellowship that are paymetn for teaching, research, or other services are generally taxable as wages even if the services were required to get the grant."
so, if it is a pure scholarship, nontaxable, but if you provide work(service) then it is your income, and should taxable.
play with IRS you bear your own risk. The audit rate is 0.58 percent in 2001. If you get audit, the penalty is high.(check IRS publication)