Proposition bet during a hand... what would you do?

[tpir90036]

A bizarre hand that my friend played in the 5/10 NL game at the Borgata last weekend:

6(!) limpers to Hero ($1200) on the button who limps along with A[img]/images/graemlins/heart.gif[/img]T [img]/images/graemlins/heart.gif[/img]. The SB (Donk) makes it 30 to go. BB folds, everyone calls as does the hero.

Flop: 8 players ($250) - A [img]/images/graemlins/diamond.gif[/img]2 [img]/images/graemlins/diamond.gif[/img]A [img]/images/graemlins/club.gif[/img]
SB bets $100, folded to Villain in MP who makes it $500. Villain has the table covered and is the table captain. He does not appear to have a low gear and has been making huge bets and raises at raised pots and taking them all down uncontested. Folded to Hero who decides to go all-in (comments on this play are fine but this is not the point of the post). SB folds. Here is where it gets interesting.

Villain flips over 2 [img]/images/graemlins/spade.gif[/img]2 [img]/images/graemlins/club.gif[/img] and says "if you just give me the $500 and fold we can call it good." The dealer has no problem with this. Your move?

1) Examine the math of the situation. What *should* you do?
2) In the heat of the moment what *would* you actually do?

Later,
tpir

P.S. Yes, this hand actually happened. The details of the flop suits/stacks might not be exact. But it happened.