Raise or all in?

[waj4ever16]

I'm at final table of $150 MTT (about 800 entrants or so) and have $80,000 in chips which is good for 5th place out of 8 people. Blinds are 3,000-6,000. The guy in 2nd position just lost an all in and is low stack at the table with $18,000. The next hand he goes all in and I get AQ of diamonds and make it $35,000 to go. Everyone folds around to the small blind who thinks about it for about 20 seconds and calls. I immediately think to myself that he has either 10s, jj's, or QQ's and wants to see a flop before he commits all of his chips. Flop comes 10,8,4 rainbow. He immediately goes all in and I quickly fold knowing that my read was probably right and I'm probably drawing to 6 outs at best. Ace comes on the river which would have given me the pot and massive chip lead but I know it was a good fold because I was beat on the flop. Turns out that 2nd position actually had a legitimate hand (KK's) and small blind had JJ's. My question is... Should I have gone all in after 2nd position's all in to shut out the other players or was making that significant raise the right thing to do? Thanks for your help. By the way, I finished in 7th taking home $3300 which is not bad considering the fact that I won my way in through a $9 satellite.

[SixgunSam]

Congrats on the finish! It seems to me that if you are early, the best play would be to flat-call his raise and all-in would be the second best play. With AQ, you would want to see all 5 cards or be able to get away from the hand, but raising half your stack here doesn't allow you to do either gracefully.