Relying solely on virtual springs and dampers, the transparency of standard virtual coupling suffers from the device-proxy coordination error when a large interaction force is engaged (e.g., contact tasks) and also from the unmodifiable inertias of the haptic device and the virtual proxy. To overcome these limitations, we propose a novel virtual coupling scheme, which, utilizing passive decomposition and a human force observer, can maintain the device-proxy coordination error even during contact tasks, while also allowing for scaling down (or up) the apparent inertia of the coordinated device-proxy system, thereby, substantially improving transparency of the standard virtual coupling. Experiments are performed to show the performance and passivity of the proposed virtual coupling. Minimum-possible passive inertia scaling is also theoretically established via some positive-real analysis.