Villain donking half pot tells me he is not folding (removes air from his range) and that he is bad because in reality he shouldn’t donk half pot with anything (leaving a silly quarter pot behind). Hero is still committed and just looking to get all the chips in. We would need very strong reads that villain takes this line with pretty much only monsters to lay aces down, but villain is an unkown and apparently bad.
Agree that villain isn't folding and doesn't have air. Don't agree that villain should never be donking for half pot into obvious aces.* Whether villain is bad might have been apparent later in the session, but wasn't apparent when the hand was played, so is irrelevant here.
I think we can draw more reasonable conclusions from his half-pot donk, though. I think we can remove:
(a) almost all KKxx/QQxx hands;
(b) most wrap and one pair plus small wrap hands.
The above hands would usually check and, if they bet, would be full potting to maximize fold equity. The only hands that should be doing everything possible to get the rest of the money in are sets.
In my view, the only hands that might sometimes donk for half pot that we would have to call off against are two pair hands. Obviously we aren't a favorite against those hands, but our equity makes it an obvious call. Against sets we are clearly not getting the right price and should fold.
Whether we should get it in or fold the flop is determined by how much we weight villain's range toward sets, which have us crushed, and how many combos we throw in of the hands discussed above that we can mostly (but not entirely, obviously) exclude. In my experience, the range of a random guy sitting at a red chip PLO game is going to be way too set-heavy here and so I would fold.
*Betting the same amount as an opponent's bet on a previous street is a very common and useful line in live poker when a player is looking to maximize the likelihood that his opponent will put more money in the pot, particularly at low-to-mid stakes ($1/2-$5/5 big bet). Often at these stakes PSBs are "a lot" of money in an absolute sense to the players and so, despite it appearing that they are pot-committed, they will find folds due to the size of the bet. The social pressure and embarrassment that attaches for some players to folding when their opponent repeats their earlier bet is often too much than they can bear and they will call more often. Then on the turn you can just bet the same amount again and they're all-in whereas they might have gotten away from the flop for a PSB.