I'm an international student at a US business school and plan on working in the states for a while after graduation. Am I eligible to open an IRA (either Roth or Traditional)? Depending on how long I work in the states and what my rate of return is on my investments, paying the 10% penalty may be worth it to enjoy tax-free compounding. Thoughts?

I know of nothing against it from a legal perspective. You'll need a social security number.
From a tax planning standpoint, I have no opinion, and anyone who does is likely to need more facts. Offhand, your idea sounds like a good one.