Tough beat, but I don't think the eventual winner played the hand all that badly. There's 4400 in the pot when it gets to him, and the original raiser's stack size suggests that KQ is not dominated. Now, in his position, I 3-bet to try to get HU with the short-stack. The way he played it, once the other short-stack came along, it was party time.
Anyhow, with the action the way it was, I can't see him folding to one bet on the flop. Now when the K comes on the turn, he's got to figure he's ahead half the time, so he's tied to the pot. You're aggressive enough that a reasonable player has to think you'd 3-bet that preflop situation down to at least JJ and maybe TT or 99.
That's the 2-edged sword of limit tournies. You've managed to get a worse hand tied to a huge pot. This time he got lucky. Most of the time, you have a huge stack after this hand (bigger, I might add, than you would have had if this were NL).
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