$3/$6 am I way off base here???

[halis123456789]

$3/$6 Limit Ameristar

Been playing about an hour or so, game is generally loose passive. It seemed like anytime someone raised Pre-Flop they had a big pocket pair. This is the very first hand for the Villain as he has just sat down. The other peculiarity is that he only bought in for $50.

Hero is BB w/ 77

Villain limps in CU
SB calls
Hero checks

Flop: 7 3 4 (Rainbow)

SB checks, Hero checks, Villain bets, SB folds, Hero raises, Villain re-raises, Hero ????????????????????????????

Here's the thing. I thought this was a very obvious play. This was actually a hand my little brother played (he is new to live poker.) We seem to STRONGLY disagree.

I want to know, what do you do on the flop? What do you do on the turn? And why.

Results to be posted later.