Know when to holdem, know whento foldem

After reading much of Ed Miller's advice on not folding too much in big pots, I've had a hard time knowing when to apply this concept. What do you think I should do in the following situation. The pot is big, I may have the best hand (which can easily be outdrawn), or I'm way behind. Call, fold, raise, call and raise the turn if the turn is a blank? All of this went thru my head in about 5 seconds. I didn't know what to do.

Preflop raiser was LAG. MP3 seemed to be a solid player.

Stage #248095665: Holdem Normal $1/$2 - 2005-12-16 12:15:21 (ET)
Table: DELTA DR. (Real Money) Seat #8 is the dealer
*** POCKET CARDS ***
Dealt to HERO [8 [img]/images/graemlins/club.gif[/img] 8 [img]/images/graemlins/diamond.gif[/img]]
UTG - CALLS $1
UTG +1 - Folds
MP1 - Raises to $2
MP2 - Folds
MP3 - Calls $2
HERO - Calls $2
BUTTON - Folds
SB - Calls $1.50
BB - Folds
UTG - Calls $1
*** FLOP *** [7 [img]/images/graemlins/spade.gif[/img] 4 [img]/images/graemlins/diamond.gif[/img] 10 [img]/images/graemlins/diamond.gif[/img]] (11 SMALL BETS)
SB - Bets $1
UTG - Calls $1
MP1 - Folds
MP3 - Raises $2 to $2 (15 SMALL BETS)
HERO - ???