He played the hand like an idiot clearly.

If you knew there was a clown like him at your table who would call to see a flop too light tho, there is nothing wrong with folding AQo in ep, given that losing one small pot even gives up most of your fold equity in the future. For you, it might be different because I revolve on a game of thievery a bit excessively when really shallow stacked like that and you clearly are playing a little bit out of that realm, but just cause AQo is pretty doesn't mean you have to play it.

If you do tho, I'd shove/fold. You can't really fold to a 3bet anyways, so might as well maximize your fold equity.