Well, the responses to this have convinced me at least that it is not an obvious decision, and that I should have posted it in a Standard bidding context.
If playing positive responses to 2♣, I think one could have the auction 2♣-3♣-3♠-4♣-4N-5♦-5♥-6♣-7♣ I think it would be more common to end in 6♣ though.
1. The North hand made a light, but not completely insane double. 2. Why didn't East bid over the double? Maybe he cannot NFingly bid diamonds playing whatever methods he's playing. 3. 3♣ looks like quite a s t r e t c h to me. 4. North certainly has no extras in any context after his initial double, so should pass whenever possible. 5. Given that I don't think West has a good enough hand for 3♣, East's hand is huge at his second turn. I think making 7 is as likely as making 5 or less.
The standard approach with 3-card support is to normally raise, but bid 1NT followed by 2M if you have a very poor hand. The effect of doing this will be that partner will be less likely to make a game try. Thus I'd say 7-10 total support points (including the OP hand) should raise directly, and hands with 5-6 total support points should start with a forcing notrump. IMO this is not the same as constructive raises.
The worst things about this system, in order, are: 1. The 2♣ opening is forcing, and describes a set of hands where responder will commonly want to play in 2♣. 2. The 1♣ opening can be a single suited club 12-16 or any 17-20. This means that an unbalanced 17-20 with primary clubs and another suit will be virtually impossible to show. 3. The forcing 2NT opener will be a disaster pretty much whenever opener has a strong 2NT and the field is passing a strong 2NT.
Pass. I have one more diamond than I promised, but I have two spades where I might have one or zero. Besides, partner knows my hand way better than I know his. Even if all this didn't make it clear, on top of it all, we're red!
1. Pass 2. 2♣, planning on either raising to 3♥ or rebidding 2NT Second one is kind of a gamble, but I think the chance of finding a lucky heart or NT contract makes this action have a higher expected value than transferring to clubs and passing.