[crunchy1]

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yes, he is a SLIGHT favorite over a random hand, but that's NO reason to raise. even a super weak and very loose player has an above average hand if he limps UTG (even if he folds only the worst 30% of his hands, he will have a random hand beat most of the time).
that means, even if hero succeeds in isolating the weak player, the average profit would not be very high. but if any other player enters the pot (most of the time with a raise) hero will be a big dog and lose much money.

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3-to-2 favorite + buying the button + possibility of getting HU against a player who plays poorly post-flop + increased fold equity against any other loose cold-calls = decent play.

If nothing else it is unquestionably not "horrible" - as you described in your first reply.