OK... my take.
I both like and dislike the preflop reraise. I like it because I think it's a good idea to attempt to isolate the short stack (SS). Short stacks will go crazy with a wide range of hands, and KKxx is ahead of most of them. I have no read on this specific villain, so maybe he's different -- this is just a generalization about SSs.
I
don't like the pfrr for two reasons. First, a reraise here almost screams out AA or KK (at least at the levels I play). As such, a decent player can call with a wide range of hands hoping to hit a hand like 2pr or a pair and a draw. Second, if anyone calls, Hero is OOP for the rest of the hand -- yuck. Furthermore, if two or more low cards come on the flop, Hero might have to CB and have no idea where he stands (up against a low? a high? a two-way hand?)
When BB calls, I'm not liking my hand/position all of a sudden.
The flop takes some of the heat off, though. The kings in hand serve as effective blockers for the broadway straight draw, and the 9T straight is an unlikely holding (BB would have to have A29T or something like that unless he just likes those mid-wrap hands). There is only one low card, so the low hands probably will fold to heat -- I'd really be hating it if two or three low cards hit the flop (likely splitting the side pot while possibly getting semi-freerolled). JQ is one hand that villain could hold, but it's statistically unlikely. KK is likely ahead -- maybe only a TP hand (esp. with flush draw) will call -- so betting out seems good to me. FWIW, actual values:
http://twodimes.net/h/?z=1641627
pokenum -o8 kh kc 5c qh - ac jh 2c 5d -- 8h qd jd
Omaha Hi/Low 8-or-better: 820 enumerated boards containing Qd Jd 8h
cards scoop HIwin HIlos HItie LOwin LOlos LOtie EV
Kc 5c Kh Qh 456 592 228 0 0 0 0 0.639
Ac 2c 5d Jh 228 228 592 0 224 0 0 0.361
Not really sure what villain was thinking here. If he held the diamond draw, though:
http://twodimes.net/h/?z=1642445
pokenum -o8 kh kc 5c qh - ad jh 2c 5d -- 8h qd jd
Omaha Hi/Low 8-or-better: 820 enumerated boards containing Qd Jd 8h
cards scoop HIwin HIlos HItie LOwin LOlos LOtie EV
Kc 5c Kh Qh 273 359 461 0 0 0 0 0.385
2c Ad 5d Jh 461 461 359 0 224 0 0 0.615
I wouldn't be happy about this as Hero.
I would personally only put the SS on AA (if anyone). If he has it (as I said before, usually SSs have a wide range), then good for him. If BB had AA, then I imagine he would have rereraised getting almost half a stack in preflop. I also imagine that CO would have openraised with AA, so that possibility is really not likely. These reasons are why I wouldn't fear AA in this hand.
Overall, while Mute was ahead when he got all the money in (largely due to Villain being a complete idiot), I think that this hand is usually one where he wins a small pot or loses a big one. I think the reverse implied odds are fairly huge against a thinking player that puts Mute on AA or KK, and that makes the reraise preflop questionable in my book.
I'm not really sure how I'd play this, though. I'm thinking that maybe I would call and see what BB and CO did and take it from there. On the same flop with the same players, I think I check hoping that BB checks and Button bets so I can CR. A lot would really depend on reads and PAhud stats (e.g., fold to flop raise and agg freq). If the CR didn't get it HU with SS, then I probably wouldn't put any more money in the pot (esp. when the third diamond hits the turn). Again, a lot would depend on reads. Check-fold would also be possible for me on the flop just because I don't want to trap myself and build a big pot OOP with just an overpair. Check-call strikes me as a bit silly unless I think BB will passively check it down on the turn and river.