Ok so i put in 7 choices, each school has a certain amount of scholarships, i compete against other people who put that school choice? And if i win one from multiple schools, i am given those offers as well? So if i do accept one from a school, and get denied from admissions, what would happen to the scholarship then?
-First you compete to be considered for a scholarship. (ranking on Order of Merit list)
-Second you compete for the slot at each school against applicants to that school.
If you get a scholarship but do not accepted, you may be able to get a empty slot somewhere else. You would be picking through the 'leftovers'.
If you accept a scholarship, and do not get accepted, you forfeit the scholarship unless the PMS at the awarding school, and the PMS at another school (where you have been accepted) agree to the transfer. Current budget make this is rather unlikely.
IMHO; (opinions vary, this is mine, I am assuming you need the scholarship and want to be a career officer, if you are doing this for sh!ts and giggles, shoot for the moon)
Put a school as your #1 choice that you are certain of being accepted at. Many schools have rolling admission, if you can get accepted before the board deadline, even better, note it on your app. Talk to the ROO and PMS at that school, visit, overnight etc., Work for it.
If you intend to be a career officer, there is also a pretty good case to be made for going to a school where you can excel, the Army will rate you on your GPA and extra-curriculars, not how hard the school/program is. From the Army point of view, a 4.0/honors/Magna Cum Laude history major from State U trumps a astrophysics/exobiology double major 2.0 GPA from Ivy U. Also recognize that ROTC is time consuming, making a school that is difficult for you - that much more difficult, and cuts into your time to get involved in all the other things that makes college educational. The Army also wants you to be a well rounded individual, involved in sports, student government,extra-curriculars etc., Picking a school where all you can handle is the coursework will hurt you in getting your Army branch choice as well. If you are mostly looking for someone to pay for your schooling, but still want to serve your country (sort of) go the SMP NG route.
I think being a 'top applicant' (top 1/3) at your first choice school increases you chances of getting a scholarship offer.
Put you dream schools as #2-6, You will probably (but not necessarily) get offers to more than one school, giving you a choice. Put choice 7 as a school you may want to transfer to, if you end up hating your school, study/work like a dog, ask for a transfer after 1st yr. It is easier to transfer into many very competitive schools than to to get in as a freshman, although transferring ROTC scholarship is tough. You can be accepted as a transfer student after a yr of college to a school you would not dream of being accepted at as a high schooler. Most colleges only look at your college coursework after you have completed a yr or more of college.
If you stay in the Army, you will probably go to grad school, you want it to get promoted.
If you serve 4+ years, and get out, your degree can be stale, and you may want to go to grad school as an entry to the work force. Consider this when selecting a degree, a computer science degree will get stale very fast, a mathematics degree, much less so.
So think of your undergrad as a way into a graduate program. Where you go to grad school is more important than your undergrad.
(Someone who got a BS from Kent and a MS from Harvard looks better than a BS from Harvard and a MS from Kent)
Best of luck.