22: Steal Attempt Gone Wrong : Now What?

[beset7]

I didn't play this hand but I argued with somebody about it. Would you guys chime in?

Party Poker 22+2 Pot Limit Hold Em SNG

Seat 1 has 1470
Seat 3 has 2635
Hero has 1290
Seat 8 has 985
Seat 9 has 1620

Blinds are 100/200

Players have been very very passive preflop. Calling off half there stack with A2o etc.

Hero has Q [img]/images/graemlins/heart.gif[/img] 8 [img]/images/graemlins/spade.gif[/img] and is EMP.

UTG folds, Hero raises the pot to 700. Seat 8 pushes in for 985. Seat 1 calls and so does Hero.

Flops comes 6[img]/images/graemlins/club.gif[/img] 2[img]/images/graemlins/heart.gif[/img] K[img]/images/graemlins/heart.gif[/img]
Check, Check.

(pot is 3kish) Turn is Q [img]/images/graemlins/club.gif[/img]
Hero pushes his last 305 in.
Seat 1 calls.

Thanks in advance for any comments.