Small pair at loose table

[MDO67]

I am really trying to improve my post flop play. After posting a thread where you all told me to reduce the VP$IP to around 20-21, I have become a much tighter player preflop. This,of course, shines the spotlight on my questionable post flop play.

Here is a hand I played a few minutes ago along with the thoughts I was having while playing the hand. Please let me know where my mistakes are so I can get better. 60% of the table is seeing the flop and the hands shown have often been junk. I was not at the table long enough to get any reads on the villain.

Paradise Poker 0.25/0.50 Hold'em (9 handed) converter

Preflop: MDO67 is UTG+1 with 3[img]/images/graemlins/club.gif[/img], 3[img]/images/graemlins/spade.gif[/img].
<font color="#666666">1 fold</font>, MDO67 calls, MP1 calls, MP2 calls, MP3 calls, CO calls, Button calls, SB :#A500AF(Villain)/ completes, BB checks.

Here I am following the loose SSH chart - with 8 people seeing the flop it makes sense.

Flop: (8 SB) 7[img]/images/graemlins/spade.gif[/img], 4[img]/images/graemlins/heart.gif[/img], 5[img]/images/graemlins/spade.gif[/img] <font color="#0000FF">(8 players)</font>
Villain checks, BB checks, MDO67 checks, MP1 checks, MP2 checks, MP3 checks, <font color="#CC3333">CO bets</font>, Button calls, Villain calls, BB folds, MDO67 calls, MP1 folds, MP2 calls, MP3 calls.

Now I realize that anyone holding a single card that appeared on the flop has me beat. I still call because the bet came from late position and there is no certainty that I am behind.

Turn: (7 BB) 5[img]/images/graemlins/heart.gif[/img] <font color="#0000FF">(6 players)</font>
Villain checks, MDO67 checks, MP2 checks, MP3 checks, CO checks, Button checks.

I am now holding 2 pair (which may win UI), have 2 outs to a full house, and have 4 outs to the ass end of the straight (We'll discount that back to only 2 outs). If I counted correctly that means I need 10.5:1 in order to call. (During play I forgot to discount so I thought I needed about 7:1)

River: (7 BB) 6[img]/images/graemlins/spade.gif[/img] <font color="#0000FF">(6 players)</font>
<font color="#CC3333">Villain bets</font>, MDO67 calls, MP2 folds, MP3 calls, CO folds, Button folds.

I hit it now and realize that I am at the bottom end. I call and pray that there is no 8 out there.

Final Pot: 10 BB

What do I need to change here? Should I get away from the pair on the flop?