Wikipedia: "Today, organizations in the United States use the term as a broad catchall to refer to persons with a historical and cultural relationship with Spain, regardless of race and ethnicity. The U.S. Census Bureau defines the ethnonym Hispanic or Latino to refer to "a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race."
Hispanic Scholarship Fund: "To qualify for this program, students must be at least one-quarter Hispanic/Latino. Hispanic/Latino is an ethnic category, not a racial category; students may be of any race."
Given that Hispanic/Latino is not viewed as a race, physical appearance shouldn't have any bearing on eligibility. Someone with blue eyes and blond hair with typical Nordic features or someone who looks Chinese could be just as Hispanic/Latino as anyone with a typical Mexican appearance. "Students must be at least one-quarter Hispanic/Latino to qualify." There's no reason that someone with Dominican citizenship shouldn't qualify as being 100% Hispanic.
If organizations wishing to eliminate "ethnic fraud" (as some call it) begin investigating or challenging applicants' claims to being Hispanic/Latino, it seems to me that holding citizenship of a Spanish-speaking country would be one of the best pieces of evidence one could have.
Hmm, it's an interesting question, but I think that if you feel you may have to prove it, you probably aren't it. I disagree that citizenship in itself will ever make you Hispanic in the way we commonly refer to it in the US. I may acquire Chinese citizenship as an adult, but I will never become ethnically Chinese. As others have said, ethnicity and nationality are different. Dominican citizenship allows you to legally declare yourself Dominican, it doesn't change who you are ethnically. When you think about it, it's the issue that the "stateless" Haitians have--having grown up in the Dominican Republic they "feel" Dominican, but in fact their paperwork declares otherwise.
By the definition above, I would think that 1/4 Hispanic would mean that you have at least one grandparent that was Hispanic. The blonde hair, blue eyed example typically comes up in reference to missionary kids who live their formative years in a different country and feel they are XYZ. When asked why they feel they are XYZ, their answer involves that they were raised in that environment, not that they acquired citizenship through XYZ means. So put yourself in the shoes of the person that reads those applications. If the intent is to give opportunities to people that are Hispanic, would you choose a candidate with no ties to the culture or country but has paperwork declaring citizenship over one that grew up there and relates culturally?
Having said that, it's doubtful that anyone would ask you to prove it. They would consider the totality of the application, including need and grades. Having contributed to the Hispanic community in any way, is also helpful, so I'm not discounting living in the Dominican Republic in and of itself. However, you would qualify for scholarships for Dominicans, as that's what citizenship gives you the right to.