Shop says they need to replace gears...what would cause this? Sounds a bit fishy to me
I have seen trans that 1 gear failed and took out the whole trans. Large chunk of gear broke off and damaged all the other gears.
From the sounds of your issue I would say that is possible. If it was acting up before the grinding I would say possibly a bent shift fork or synchronizer, but without seeing the thing I am just guessing. Too many things that could go wrong, a bearing failure that allowed a shaft to move so things weren't meshing correctly, etc.
Hopefully the mechanic can tell what cause the failure so it won't happen again. Just from the few people I know with similar tractors it is rare for the MF trans on a compact to fail.