Hi,
Very nice that you got the controller working in your application, this means you are already a step ahead of me! I have to admit that I also did not spend that much time on it anymore as we focused on other things in the project first.
For that reason I also do not have a similar experience with this controller, but the issue you mention does sound like the controller settings you use do not guarantee completely passive behavior. Minimizing the impedance of the system (using a compliance controller) can result in non-passive interaction with rigid objects. The oscillations will probably be damped out by the physical damping in the joint which makes that the overall system will still be passive, but for guaranteed safe interaction it might be best to keep the compliance away from its maximum value.
It might be interesting for you to take a look at passive interaction control:
https://ieeexplore.ieee.org/document/1307462