Will mustard seeds soften in a sauce? do mustard seeds melt into a dish if they are an ingredient in making a sauce?  if not, would they be strained out after a specific lenght of time?  Do they get softened in liquids?
I wanted a sauce that reminded me of a sweet and sour sauce from a chinese dish and would compliment the meatloaf but not be too thick like a flour or starch based gravy.

Cranberry and Red Pepper Sauce:
 2 thinly sliced red peppers
 1 cup red wine
 1/4 cup red wine vinegar
 1/3 cup sugar
 2 tsp mustard seeds
 3 tbsp dried cranberries

To make the Cranberry and Red Pepper Sauce return the frypan to a low heat and cook the red peppers for 5-6 minutes until soft, then add red wine, red wine vinegar, sugar, mustard seeds and dried cranberries. Simmer 10-15 minutes until reduced by about two-thirds. Cranberry and Red Pepper Sauce can be made in advance and reheated when needed.

I am familiar with pickling spice and use of mustard seeds in a scratch made recipe for Sloppy Joes my mom made and put the mustard seeds in but do not remember if the seeds were even noticed and know that the only crunch in mom's recipe was from celery.
They will not "melt" into the sauce, but I think your desired effect depends on how long they cook in the sauce.  I frequently make "pickled" mustard seeds, which result in a softer seed that pops in your mouth, rather than remaining crunchy. A great garnish or condiment. Not crunchy at all.   There are two ways to do this: 1.  bring to a boil, then strain, repeatedly 8 - 10 times.  This removes the tannic notes, then the seeds are placed in pickling brine.  Method 2 brings seeds to a boil in pickling liquid and simmers them for 30 - 40 minutes.   Method 3 makes use of a pressure cooker.  All result in mustard seeds that are not crunchy, but soft and pleasant to eat.  You could certainly obtain the same result in a sauce.  In fact, I could see it adding an interesting textural component to the dish.