Missed opportunity against LAGG?

KINGPIN is somewhere between LAGG and maniac. He'll raise any two and reraise and push pre and post flop. There are two problems I see:
1. His range is huge, so if he pushes the flop I just have to call. This really isn't that much of a problem when holding KK but if an Ace falls - I think I still may call.
2. He gets callers because everyone is used to his raises.

Therefore, I raise it to $2 to isolate him knowing this isn't a good spot to trap. His tiny reraise was telling me he'll go higher. That bet makes zero sense to me...but that's him. I figure reraising him big would get him to call or push. Then...wtf? He folds.

Is my logic above correct here against a borderline maniac or did I just miss some free money?

***** Hand History for Game 2927196426 *****
0/0 Texas Hold'em Game Table (NL) - Sat Feb 25 00:26:07 EST 2006
Table Table 36638 (6 max) (Real Money) -- Seat 6 is the button
Total number of players : 5
Seat 2: Alky37 ( $19.30)
Seat 3: jedimonkey ( $7.55)
Seat 4: KINGPIN0505 ( $33)
Seat 5: janje ( $53)
Seat 6: scars08 ( $24.25)
Alky37 posts small blind (0.10)
jedimonkey posts big blind (0.25)
** Dealing down cards **
Dealt to janje [ Kd, Ks ]
KINGPIN0505 raises (0.50) to 0.50
janje raises (2) to 2
scars08 folds.
Alky37 folds.
jedimonkey folds.
KINGPIN0505 raises (3) to 3.50
janje raises (13) to 15
KINGPIN0505 folds.
janje thinks "there goes $33".