Can a low AWA score (3) be compensated with an overall strong application and a good language test or will it become a showstopper in an overall GMAT score of 710 !!

Please advice.

Thanks.

This will depend on the school and on the strength of your application. 3 is a very low score: just one applicant in seven scores 3 or lower. 

I took the GMAT online and the AWA section wasn't available in that format so I was caught off guard and from what I have heard, Business Schools were also not considering the AWA scores for online GMAT test score. Can I be honest and highlight this scenario in my application? Will it mitigate any negative fall out of a low AWA score? Thanks

Yes, you should explain that. The balance in your score and any evidence of your academic writing will be more important without the AWA. Depending on the school, you will improve your application.