To answer your question about the BB attempting to fold...my answer is yes, I am in the opinion that folding on your option, being in for all bets, should never be allowed. When dealing I would push the cards back to the BB and remind him that he is already in. Why would a player do that? It had to be an obvious mistake.
I agree with you here with respect to "folding your option", but given what was said in a different thread on this subject, I think we are in the minority.