Post flop play when c/r?

[SumZero]

It's early in the middle game of a tournament with about 375 started and about 150 left. I was chip leader earlier on but haven't had cards for a while and been staying around 5500 to 7000 with not playing many pots. I've been playing agressively when in, but haven't been doing any blind stealing.

Hand #7332131-111 at Wed12amB-005 (No Limit tournament Hold'em)
Powered by UltimateBet
Started at 27/Jul/05 01:43:35

MrFlopington is at seat 0 with 6510.
Kmac84 is at seat 1 with 7985.
3HiSociety is at seat 2 with 0 (sitting out).
dontshuffle is at seat 3 with 11100.
taterhead is at seat 4 with 140.
ncgopman1 is at seat 5 with 60.
GrnEyedKatz is at seat 6 with 3970.
Hero is at seat 7 with 5680.
darrenelias is at seat 8 with 13225.
Villain is at seat 9 with 3405.
The button is at seat 7.

darrenelias posts the small blind of 100.
Villain posts the big blind of 200.

SumZero: T [img]/images/graemlins/diamond.gif[/img] A [img]/images/graemlins/diamond.gif[/img]

Pre-flop:

6 folds Hero raises to 700.
1 fold. Villain calls.

Flop (1500): 3 [img]/images/graemlins/heart.gif[/img] 2 [img]/images/graemlins/heart.gif[/img] Q [img]/images/graemlins/club.gif[/img]

Villain checks. Hero bets 1200. Villain
goes all-in for 2705.

What's Hero's play?

Results:

<font color="white">
Hero folds. Villain wins 3900.</font>

Is this a fine line on the hand, or should hero have played differently?