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Sharron --
The hydraulic motor mounts were introduced to the 700 in '87, replacing the more conventional solid rubber mounts. These mounts hold the engine in the proper position and absorb some of the engine vibration -- that it, isolate the engine from the car.
The mounts play absolutely NO role in how rough your engine idles. The mounts simply isolate (at least somewhat isolate) the roughness or vibration from the car. An engine with a rough, uneven idle has a tune-up problem.
If your complaint is that you feel the (normal) engine vibration in the car, then yes, the mounts may be at fault -- they do go bad. However, it's more typical to feel the engine vibration at higher speeds and/or under acceleration. A friend with a Volvo-only garage told me, "Expect to replace then at 125,000 miles."
I replaced the hydraulic mounts on my '91 740 about a year ago, at 131k miles -- he was right. They cost about $100 each (I don't remember exactly -- somewhere between $75 and $125) and took 90 minutes to install (myself). $580 seems high for this job.
If both mounts completely fail (they compress slightly, and the engine drops, oh, maybe 1/2") then the oil pan might touch the crossmember when you step on the gas -- the engine tips slightly under power -- and you'd feel/hear more engine noise. After many miles (years) of this, you could wear a hole through the pan. From your words, it sounds like they're trying a scare tactic with you.
Frankly, it sounds like you should seek a second opinion, and possible seek a different service shop. These guys probably subscribe to the "shotgun" approach of diagnosis.
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