Old Hand vs TheBeat's UTG Limp

[0evg0]

This is from a 109 about a year ago. I posted the hand at the time, but did a [censored] job of it and found that this is actually pretty interesting.

What's your line here on the flop and plan for later streets?

PokerStars No-Limit Hold'em Tourney, Big Blind is t50 (9 handed) converter

UTG (t1505)
UTG+1 (t3565)
MP1 (t2705)
MP2 (t1360)
MP3 (t1260)
CO (t2405)
Button (t2555)
SB (t1330)
Hero (t1670)

Preflop: Hero is BB with 7[img]/images/graemlins/heart.gif[/img], K[img]/images/graemlins/spade.gif[/img].
UTG calls t50, 7 folds, Hero checks.

Flop: (t125) K [img]/images/graemlins/club.gif[/img], 3[img]/images/graemlins/club.gif[/img], Q[img]/images/graemlins/diamond.gif[/img] (2 players)
Hero checks, UTG bets t200, Hero ???

Also, I went ahead and showed that I checked first to act, but would leading be better?