CMSIS-DAP is a low-speed debugger, accessible from the USB.
> we are planning to go with JTAG instead of CMSIS DAP for programming
> and debugging. Would that be fine?
Yes, it will be.
CMSIS-DAP is an optional module - i.e. JTAG can be used for the board bring-up solely.
> Also kindly mention the additional changes that would be required if go with the above mentioned design.
Just not implement the CMSIS-DAP module.
> Also will be compromising on any functionality if we avoid CMSIS DAP?
The whole LS1012A debug functionality is available through JTAG interface.
> Can you please explain the use case of CMSIS_DAP(MK20DX128VFM5) Interface?
Please refer for example to the QorIQ LS1012A Reference Design Board Manual, 2.18.1 CMSIS-DAP.