Question about all-in

Let's say the blinds are now up to $500/$1000. There's only three people left. Person B is in small blind for $500 and Person A is in big blind for $1000. Person C then goes all-in for his remaining chip stack of $700. Person B then folds. Person A calls of course since he is already in for big blind.

Person A wants to pull the rest of his big blinds back to match the $700. In other words, person A is in big blind already for $1000, since person B folded, person A wants to pull back his big blind and match person C's remaining $700. I told person A he cannot remove his big blind even if person B folded because the blinds are automatically in play.

Question:
Does this mean that person C can win the blinds even if his all-in is less than the blinds?

If this is not true does person A get to take back the rest of his blinds to match person C's all-in?

Yah, if its the allin for 700 and SB folds and its only the BB, 700 of the BB the 500 SB and the 700 AI call go into the main pot and 300 goes into a side pot that only the BB is in contention for.

Think of it this way

Blinds are 5000/10000. Player A and B are heads up with almost equal stakes but only a difference of 2 freaking chips. Play B loses an allin and is left with 2 chips. He's AI in the SB, it would be silly for the main pot to be 10002 chips.

-'rilla

Thanks rilla!