raise or fold?

[tansoku]

2/4, 9 handed:
SB just sat down, completely unknown.
A /images/graemlins/club.gifT /images/graemlins/club.gif on the button
Folds to CO who bets, I raise.
SB calls, BB folds, CO calls
Flop:
K /images/graemlins/spade.gifK /images/graemlins/club.gif8 /images/graemlins/heart.gif
SB bets, CO folds...I?
7 SB pot.

I'm thinking raise or fold. Leaning towards raise because I have a hard time believing an average 2/4 player would bet a K here.
If the answer is raise, then what?
Fold to a 3 bet, lead the turn?
Or chk-call the turn, chk-fold the river UI?

[bobhalford]

Personally, I would raise the flop and call or check turn unless a club, Ten, or A appear, in which case I would bet if SB checks.