Yes, do not file a return for her. Since it's entered as scholarship, it's under the filing threshold.
Yes, there's a small risk that you'll hear from the IRS; but that risk would not be lessened by filing a return without tax liability. I think you'll be able to explain it away if you do hear from them. Not any chance of hearing from the state, as they key off the federal, not the 1099-Misc.
