My concern is that the email title was suspension and not probation. Losing my scholarship is going to be a nightmare as it would for anyone.
Unfortunately suspension may be what you're looking at. The AROTC Contract states that the Academic requirement is to maintain a 2.0 GPA average, some take that to mean that it is the cumulative GPA but in fact it means the GPA for each semester. Since you're GPA has fallen below the 2.0 requirement, that usually means a suspension of the scholarship until your GPA goes up.
This is where it gets tricky and I'm really not sure how it works, whether it means:
1) You will owe back the scholarship for the semester in which you missed the requirement.
2) Your current semester will still be paid and it will be your next semester which is not paid.
3) Both the current and next semester is not paid.
One question, you mentioned that you are getting an incomplete for one class and when that's factored in it will bring your GPA back to a 2.0. When you remove the incomplete class from your schedule do you still have enough credits to fulfill the Full Time Student requirements for the scholarship contract. Make sure you talk to your advisor and check with the department that handles your degree audit to make sure your GPA would reflect a 2.0 for the Fall. Talk to your PMS about all this and have any paper work that would show that your GPA will go back up.
Just one other question, how does having an incomplete class bring your GPA back up, is the a class that you would been receiving a poor grade in that is going to be changed to an incomplete?
These are questions you will have to go over with your PMS, but at this point I tend to believe you will lose at least one semester of your scholarship. Again this will all be explained to you during your meeting and you will be informed of all your options.