How to proceed with 55

[GemeniSWE]

Villain is 29/24/2.7 @ 270 hands. He is really loose preflop raise.

When I am playing at tables with loose pre flop raising players the pots gets to large with small pairs if I 4 bet all my middle pairs.
Should I muck these hands and tight up my 4 bet range? And just flat call in position? Or muck?

Party Poker No-Limit Hold'em, $200 BB (6 handed) internettexasholdem.com

Hero ($205.70)
Button ($466)
SB ($227.20)
BB ($200)
UTG ($365.20)
MP ($202.80)

Preflop: Hero is CO with 5[img]/images/graemlins/spade.gif[/img], 5[img]/images/graemlins/club.gif[/img]. SB posts a blind of $1.
<font color="#CC3333">UTG raises to $7</font>, <font color="#666666">1 fold</font>, Hero ?