Hello Hotpot,
I know a native heritage speaker in Chinese from my institution who was a recipient of the scholarship. If anything, she used it as a way of making her application stronger (she used the idea of getting back to her roots). If anything, I think it helps to be a heritage speaker for this scholarship because it’s shows you aren’t just going to dabble in the language for the sake of it. You have a meaningful reason to learn the specific language— you’ll be more likely to use it to communicate with your family and ethnic community— making the chances of you giving back to this community higher. Also, you won’t disregard everything you’ve learned from the experience abroad as soon as you get back home (CLS wants to avoid this) because you will practice using the language with your kin (constantly, I hope). Additionally, should you be accepted, your familiarity with the language and the culture would be an added bonus for the group dynamic.
In short, being a heritage speaker can only help, not hurt, your chances. I’m a native speaker in Bangla, and I wondered about the same thing!