if one use datatype: 'jsonstring' the value of datastr parameter can be not only the string, but just the object which represent the data. Another possibility is to use datatype: 'local' and the input object provide as the value of data parameter.
If you want really manipulate the data received from the server you can do this inside of beforeProcessing callback function. Inside of the function you can make any changes in the data recieved from the server before the data will be processed by jqGrid.
