Re-raising an all-in

Recently a question came about from a hand played at a Posh Poker Game.  The situation includes bet sizes, and when you can raise or re-raise an all in.  It’s one of the trickier rules of the game to figure out, and it’s often handled incorrectly.  Jeff asked the following question recently based on this hand:

“So, here is the situation that actually occurred last night: 6 players in the hand. Blinds 2K-4K, pre flop…..
(SB – A, BB – B)
1st to act (C) raises to 22K, (D) folds, (E) folds, BUTTON(F) calls, SB(A) calls, BB(B) proceeds to move all it w/ 36K all day. Next up is player C, the initial raiser, who attempts to go all in for hundreds of thousands of chips. Can he go over the top here??! Sound off poker pros!!”

The question really is: “When is a person allowed to re-raise an all-in bet when there are other players in the hand”.

So what do you think?  Many people think the action stopped when the person with a low chip-stack went all in because he did not have enough to make a “legal” raise.  That *can* be true, but in this case it is not.  The official TD rules are that if the  all-in bet is at least half of a legal raise, it can be counted as a legal raise, and action is *not* stopped by it.  There is a caveat to that rule, however… those who had just called before the all in are not allowed to re-raise.  Only the person who made the initial raise, and then got re-raised may also re-raise.  If the all-in hand had not been more than half the legal bet, he would have had only the option to call.  If the original raiser had only called, the other “callers” would not have the option to re-raise.

To state that in a different way.  If you call a raise, and are re-raised with an all in that is not a legal raise, you may not re-raise.  If you raise, and then get called but also re-raised by a an all-in that is not at least half of a legal raise, you may not re-raise.  You may never re-raise a less than legal raise that is an all-in bet if you previous had just called another raise.