Re: Don’t wanna tango with you, I’d rather tangle with him.
I would've raised PF. Sure the SB will reraise you with a wide range of hand here, knowing that you'd open-raise your Button rather liberally, but since you know that his 3-bet doesn't mean much, you can always go ahead and 4-bet HU. If the BB calls, which you say is almost a certainty, I agree that it makes raising here pretty crappy. Folding PF would be dumb. Limping isn't great either because, like you said, the SB could narrow down your hands here quite a bit.
All that said, I like raising better than limping. The SB isn't going to 3-bet you here with ANY hand, or even his top 50% of hands, so there's a good chance you won't even have to face him or a reraise. I know a 3-bet and a BB call would suck, but not as bad as limping and facing a raise, and the blind bet on the flop that would follow.
GoT
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