[Todd Terry]

I think this is a marginal spot, I agree with your OP that AQ is a definite jam here. MP2 is super laggy and opened for only 8% of his stack, it's not like he's within 100 miles of being pot committed, so it's an ideal spot for SB to squeeze. SB's raise size is standard, I don't think he could put in a raise (other than some goofy min-raise) that wouldn't commit him to call a jam from MP2, so I wouldn't draw any conclusions from it. (I think drawing conclusions from whether a 3bet leaves the other player in the hand with FE is generally a mistake, since players who think about those types of things will give the appearance of the other player having FE both when he does and when he doesn't, and you'd have to watch a player a very long time to determine whether he had a tendency to do more of one vs. the other).

The call pre is also marginal, the stack depths are right on the edge of where you can play a hand like this profitably in position. The more aggro the Villain, the deeper the stacks need to be.

I probably would have played it like you did, I don't think it's a significant mistake to do so, but it wouldn't be a significant mistake to fold to the first bet or the squeeze either.