low connectors, did I do the right thing? 2-parter

[Scruff]

2 part question. Again, I'm somewhat new to the game, but I think I at least have a reasonable clue about what I'm doing. I know that middle cards suck, don't draw to non-nut hands without a damn good reason, etc..

Poker Room PLO8, .50/.50 blinds, $50-max buy-in

Table pretty loose passive preflop.

Blind1 ($14.50 in chips)
Blind2 ($58.75 in chips)
UTG: hero [ 5 [img]/images/graemlins/heart.gif[/img],4 [img]/images/graemlins/spade.gif[/img],3 [img]/images/graemlins/heart.gif[/img],6 [img]/images/graemlins/heart.gif[/img]] ($49 in chips)
UTG+1 ($63.50 in chips)
UTG+2 ($59.50 in chips)
MP1 ($11.25 in chips)
MP2 ($17.75 in chips)
MP3 ($92 in chips)
CO ($36 in chips)
Button ($47.25 in chips)

ANTES/BLINDS
Blind1 posts blind ($0.50), Blind2 posts blind ($0.50).

PRE-FLOP
hero calls $0.50, UTG+1 calls $0.50, UTG+2 folds, MP1 folds, MP2 calls $0.50, MP3 folds, CO calls $0.50, Button calls $0.50, Blind1 checks, Blind2 checks. Pot $3.50.

Question 1: I got what I wanted, a cheap look at a 7-handed pot, but is that a bad call UTG? I kind of think I should have mucked it.

FLOP [board cards 7 [img]/images/graemlins/club.gif[/img],8 [img]/images/graemlins/club.gif[/img],K [img]/images/graemlins/heart.gif[/img] ]
Blind1 checks, Blind2 bets $3, hero folds

Question 2: This should be an obvious fold, despite the wrap-around possibilities, right? 4-players still to act, 2 suited (wrong suits) board, ass-end of the wrap, with low out there too. Just want to make sure that this isn't 'weak-tight'.