Playing against evteremly loose, maniacal players

[Dizzy Cow]

I'm in a campus charity tournament, which means there is lots of terrible, loose play. The blinds starts out as 1/2(with 85 starting chips per person). I'm the BB first hand. First hand: UTG(whom I'll call "John" limps, UTG+1 raises 10, folded to me, I fold my ATo, UTG calls (John says "well, someone has to call"). Flop is rags. John bets, early position raiser calls. Turn is another rag. John goes all-in, preflop raiser folds. John shows Q6o, preflop raiser shows QJo.
At this point, I'm feeling pretty good about my chances in this tournament, considering the first hand that happened. The very next hand, when I'm SB, almost everyone limps to me, I complete with KT, John(in the BB) raises, everyone else folds. I stare at the monstrous pots and call the raise. Flop is KJT rainbow. I bet, John raises 30. I know this guy could easily be betting top pair, or much worse, so I call him down, and after the rag rurn comes, call his all-in. He turns over his AQ flopped nut straight, and I don't fillup on the river.
My question is, were my post flop calls correct? Against total maniacs like these, should I have folded my 2 pair and just wait for the pure nuts to make a killing? I feel as if I had just waited Iuntil I got the nuts I could have made money, but I'm not sure giving up 2 pair to a guy that is much more likely to be betting bottom pair or high card than a good hand to be proper strategy.