We investigate the strong coupling regime of a linear $x$-$x$ coupled harmonic oscillator system, by performing a direct diagonalization of the hamiltonian. It is shown that the $x$-$x$ coupled hamiltonian can be equivalently described by a Mach-Zehnder-type interferometer with a quadratic unitary operation in each of its arms. We show a sharp transition of the unitary operation from an elliptical phase rotator to an elliptical squeezer as the coupling gets stronger, which leads to the continuous generation of entanglement, even for a significantly thermal state, in the ultra-strong coupled regime. It is also shown that this critical regime cannot be achieved by a classical Hookian coupling. Finally, the effect of a finite-temperature environment is analyzed, showing that entanglement can still be generated from a thermal state in the ultra-strong coupled regime, but is destroyed rapidly.