It is on the transcripts because it is reported to the federal government (and maybe the state) to account for the diversity of the school, district, etc. I really, really doubt the colleges pay any attention to it. I didn’t even know all the things attached my kids’ transcripts until we went to college orientation and we were missing the vaccination record. The admissions person called over to the registrar’s office and there is was, attached to the transcript. The high school was in Florida, the college was in Wyoming, so I assume this is common since the admissions person knew to look for it attached to the transcript.
I’m not sure the school will remove it from the transcript since it is an official record. If you don’t want to mark it on the common app, don’t. You should then be reported as ‘other’ and not counted as Hispanic ethnicity on the race information reported by the colleges to the data collection programs, including the federal governments.