Confused on flop with AA, 1-2nl deep

[MisterBob]

Ok, background: Homegame at a friends place which is running fast and wild. 4 of 7 people in the game are pretty drunk, im sober.

Co which is a really bad player who overvalues his hands and plays a lot of rags limps in, so does button and sb(which is playing a solid TAG game). I raise to 14 with AA in the bb. CO calls, button folds, sb calls.

Stack sizes: Me 1k, CO 500, SB 1.2k
My table image was of a quite solid tag who could mix it up a bit and play some lag.

Flop 237rainbow. As soon as the flop hits I can see CO squirming in his seat and looking really excited about the flop. SB bets 7 (wtf???), I raise too 50 and CO instaraises too 175 total. SB folds.


I???

As the game was playing I really didnt want to play a 500bb+ pot with this villain with just one pair, I could easily felt him with a stronger hand, but isnt it very weak to fold that flop?