[dmk]

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Is this a raising hand in EP? Is it a folding hand?

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Given the UTG limp I think limping is fine. I don't like raising this up front - like you said, it sucks being out of position. I think a fold is too weak w/ no raise from UTG.
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Should I fold to villain's raise?

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Arguments can be made for and against it. Since it'll be heads up out of position, I would advise folding, especially since you're playing a little scared. Again, position is key and you're in a bad one.

Since you saw the flop, I like betting out, maybe for closer to 3/4 of the pot, but betting out is correct. When villian raises, you have to dump it. As long as you folded to the flop raise, you didn't play it as bad as you think.