0.5/1 88 vs. guy that has lost his mind and a table that knows it

[DanoMak]

This hand has me puzzled and I would appreciate any input.

The previous hand a switch went off inside UTG. He went banannas on Q6o, capping everyting and eventually running into a full house.

Limit: $0.50/$1
10 players
Converter

Pre-flop: (10 players) DanoMak is UTG+2 with 8[img]/images/graemlins/heart.gif[/img] 8[img]/images/graemlins/club.gif[/img]
<font color="#cc0000">UTG raises</font>, UTG+1 folds, DanoMak calls, 2 folds, MP3 calls, CO calls, Button folds, <font color="#cc0000">SB 3-bets</font>, BB calls, <font color="#cc0000">UTG caps</font>, DanoMak calls, MP3 folds, CO calls, SB calls, BB calls.

<font color="blue"> My mistake is probably preflop. Against a looney I either get out of the way or try to isolate him with a raise, correct? At the time, I knew he'd cap it, and I really didn't want to bloat the pot with a vulnerable hand if I didn't have to. SB is a bit of a loose cannon (approx 35/25), and I should have factored her in as well. </font>

Flop: 2[img]/images/graemlins/heart.gif[/img] 7[img]/images/graemlins/spade.gif[/img] 3[img]/images/graemlins/diamond.gif[/img] (22SB, 5 players)
<font color="#cc0000">SB bets</font>, BB folds, <font color="#cc0000">UTG raises</font>, DanoMak folds, <font color="#cc0000">CO 3-bets</font>, <font color="#cc0000">SB caps</font>, <font color="#cc0000">UTG calls all-in $0.8</font>, CO calls.

<font color="blue"> Mistake #2: I know I have UTG and probably SB beat. CO is my only concern at this point. However given that I am OOP, there are a ton of overcards that can beat me, nobody is going away until the river, and have 2 people that will likely get into a bidding war yet to act, am I right to fold? How should I factor the potential pot size into this?</font>

Turn: 2[img]/images/graemlins/club.gif[/img] (16.8BB, 2 players + 1 all-in - Main pot: 16.4BB, Sidepot 1: 0.4BB)
SB checks, <font color="#cc0000">CO bets</font>, SB calls.

River: T[img]/images/graemlins/club.gif[/img] (18.8BB, 2 players + 1 all-in - Main pot: 16.4BB, Sidepot 1: 2.4BB)
SB checks, <font color="#cc0000">CO bets</font>, SB calls.

Results:
Final pot: 20.8BB