When the Chosen Five visit Rhayada, Torrin kills a child over a cabbage039. His draconic punishment by Dominic Blackwood is aborted when the celestial messenger of Sehanine intervenes040. Paeris announces that the mysterious egg that Torrin carries038 will hatch a goblin baby, and caring for her is to be Torrin's punishment, not only for the killing, but also for his prejudice against goblins.
Aside from the Chosen Five, Mercy is the only person from the Pre-Crystal Era who remained unaltered when the party stepped into the magical crystals to face Torog. In the penultimate battle of season one, she appears all grown up and as a formidable fighter at her father's side. However, when the party victoriously returns to Irulan, she has reverted to the age of a baby.
Kyle details the rest of Torrin's and Mercy's life in episode 048: the Dragonborn returns to Tchotchkie's in Stebrook and lives out the rest of his days as inkeeper and raises Mercy. He also mentions a tearful goodbye when she is all grown up, and Torrin sends her on her way into the world to make a life of her own.