Generally speaking it is better to attack loose stealers than it is to passively defend against them. You give up initiative and are likely folding to cbets in the 66% of hands you miss the flop with. If they start 4-bet stealing, tighten your resteal range to hands you are happy to go broke with and jam it to the 4bet. Ultimately the fold equity is on your side, as you will put HIM to a decision to call for stacks or fold.
If you aren't comfortable with playing back at really loose, strong stealers (who 4bet wide in blind wars) - be it because of the variance or just not wanting to play that aggressive - leave that table. A player in NL10 who 4bet steals strongly is a rarity, and most poker rooms will have plenty of other tables you could play at without having to deal with a vicious blind thief.
Vs this guy if he folds a lot to 3 bets I will resteal with nearly my entire ORL range (~30) and take the profits then leave if he starts 4betting, because I don't personally enjoy the variance involved in defending yourself against that player, and there are dozens of other tables I could sit at and get a never-steals-blinds rock on your right instead.
As played postflop:
Flop: raise bigger - to around $1.40. You are playing bet-raise-jam here, as the villain's range includes going all-in with a lot of draws, qx hands, overpairs. Sometimes bigger two pairs, sometimes sets. You can't win them all.
To put it in perspective, your 40 cent raise was like betting 40 cents at a $1.20 pot (60c pot, his 30c + the already called 30c of your raise = $1.20). You would never do that, so don't raise like it either.
Turn: the turn card is somewhat ugly (56 made it and so did JT, and you gave him tolerable gutshot odds with that baby raise). We aren't getting away from two pair in any case. Instead of betting 2/3rds of his remaining money, bet the lot ($2.05). You aren't folding if he shoves over for 75 cents, so bet it all yourself.
The turn was an ugly situation generated by the poor raise on the flop.
