A lot of people will call a big raise preflop with pairs. Most good players look for a raise less than 10% of the smaller stack size between the two of you (around 5%-15% depending on who you ask). The reason is because you will flop a set about 1 in 8 flops and you will be playing for stacks. So the fishy move was the call with an open ender on the flop (assuming he was getting worse than 3:1 or so).

When you play aces, what are you trying to do?
Some people are happy with the blinds and just move in (late in a tourney?).
Some people slow-play them (I personally think this is a little greedy and will bite you in the ass, but it's pretty common in short games).

Most players raise enough to knock out all but one or maybe two players. If the game you play is so loose that 4-7 people will see the flop anyway, just go ludicrous speed and you'll eventually find a raise that works.

Your play was good. This stuff happens. Poker is a game of lots and lots of hands, and almost 1 in every 5 times, your aces will lose to a lower pair.