fold a set short handed???????

[redbeard]

1/2 NL (6-max)

two players just sat out on the previous hand so the game is three handed.

button: ($185) 22/13 typical tag stats
small blind: ($350) 50/8 1AF loose passive player
big blind: ($385) HERO

HERO dealt: 7c 7s
preflop: button min raises to $4, sb calls, HERO calls
flop: 7d 6c 5d

sb bets $8, HERO raises to $28 (my thought here was that the preflop min raise by the button meant he was very strong or very weak so if he was strong w QQ+ type hands he'd be willing to put in quite a bit here and if weak he'd be folding anyway so i thought i'd try and get him to commit to a big hand -- so this is why i didn't just call and see what the turn brought (is this bad?); and i figured that the small blind was on a draw of some sort but he is pretty passive as mentioned.)

anyway button folds and small blind goes all in for $338 more.

HERO does what?

also let's say for arguements sake HERO has 66 or 55 instead of top set what does he do then?