What happens when a turbo-prop is over-torqued?
This short answer is that you could break something if you over torque the engine.  And that's really about all that we can tell you in general terms.  The manufacturer or an engine repair shop could tell you what is most likely to fail for a particular model, but the failure modes won't be consistent from engine to engine.

As far as what to do if you were to over torque one, refer the the aircraft flight manual.  They will have a limitations section, and most airplanes will have "transient" limits in addition to the "normal" limits.  For instance, the limitation could be 100%, with a transient limit of 103% for 10 seconds and 105% for 5 seconds.  If the transient limits are exceeded, then you (or more likely a mechanic on your behalf) would need to refer to the maintenance manual for instructions.  Depending on the severity of the exceedance, it can be anything from simply logging it in the engine logbooks to a complete tear down and overhaul of the engine.

I'll also add that some pilots lean towards pretending that the exceedance never happened, and hope that nobody noticed.  This is not a good idea for several reason, the main one being that something could have been damaged that is not immediately obvious.  Even though things are running correctly now doesn't mean that all is well, and if an inspection is required, it's for a reason.  Another issue is that a lot of modern engines are computer controlled and monitored.  The next time that the computer information is downloaded, maintenance will see the exceedance anyway and if you have flown it since then you could be in even more trouble.

In short, follow the AFM procedures for your airplane.  They are there to help keep you safe!