FT small live tourny low M's

[feint06]

Background:
35-entrant tournament, now down to a 9-handed final table. Top 5 are in the money. Average chipstack is about 8000, blinds are 500/1000 with no ante.

Relevant chipstacks:
Me (SB): 8500
BB: 9000
MP1: 3000
CO: 7000
BTN: 4000

I'm in the small blind with Q[img]/images/graemlins/diamond.gif[/img] 7[img]/images/graemlins/heart.gif[/img]

MP1, CO and button limp. I complete, BB checks.

Flop is 9[img]/images/graemlins/club.gif[/img] 9[img]/images/graemlins/spade.gif[/img] 7[img]/images/graemlins/club.gif[/img]
checked around to the CO who bets 2000. Button folds. I have a good read on the CO and am 85% sure she has air (no draw).

Question 1: What do I do now?
Question 2: Should I have just taken the initiative and bet in 4 players rather than check?
Question 3: Should I even play this preflop?