What is the sign that the motor mounts have gone bad? I hear a slight chirping sound when the engine moves..other than that...everything seems to be in order and i dont feel any roughness when idling or accelerating.

 

the chirping is a sign

 

is there a chance of long term damage if not fixed? and it the motor mount does not work as expected..does that cause an issue with how the engine works with the tranny? ( Doesnt mesh well with it?)

 

not really, just causes a lot of annoying "rubber-banding" (internal rocking back-and-forth when you take off and/or stop repeatedly) with some occasional noise... It's annoying.

 

your tranny is bolted up to your engine, you should be fine.