K J x makes plenty of sense here.
As does 88 if he was a really passive player (I have seen this type of play from a passive set on a flush board til they hit a FH a few times - but it's player specific then).

Most will say to raise the AQ from the BB, particularly in a limped 3-way pot. I don't think your play was poor - you may still have the best hand at the river so you put out a blocking/value bet --- I've even seen a weaker flush just call there...but he says you're beat - adios. Good fold.