Well, if they get in the habit of stealing from you with all-ins, you're only going to lose a few small pots until you get a chance to shove a strong hand down their throat. There's nothing wrong with playing somewhat weakly against a maniac, I think.

As far as the HH, I think there is very little chance that your straight is any good. I'm betting CO filled up aces full of jacks or queens and is hoping a flush pushes on him.

Edit: Hmm, no, it was unraised preflop, so I'm probably wrong there. I suppose he could still have AJ, maybe A8, or possibly he is the guy with the flush.