President Anwar Sadat, denouncing his Arab critics as ignoramuses" and "dwarfs," promised cheering Egyptians today that he would bring them "peace based on justice and affection - not on hatred."

Speaking from the balcony of an ornate 19th century palace that was once the seat of the Egyptian monarchy, Sadat grinned broadly and held up his arms to asknowledge and held cheers and chants of approval from an estimated 250,000 Egyptians who turned out to show their support for his peace initiative.

Immediately after the rally, Sadat flew by helicopter to Cairo airport to greet King Hussein of Jordan, the first leader of any of the "confrontation states" to meet with the Egyptian President since he broke with a quarter century of Arab rigidity by visiting Israel.

The two leaders embraced and smiled, but made no official statements. Hussein has given indications that he is prepared to accept and try to make the most of the completely new situation created by Sadat. He also has close ties, however, with Syrian President Hafez Assad, with whom Hussein conferred yesterday.

Syria's government-controlled media indicated today that Hussein made little progress during yesterday's talks in Damascus in trying to mediate the dispute between Sadat and Assad.

Damascus Radio said Assad had reaffirmed "the importance of firmly facing the policy of surrender expressed through the (Sadat) visit of capitulation" to Israel.

Despite the harsh words, the Arab medaiation efforts continued. even as Hussein efforts continued. Even as Hussein flew here for talks with Sadat. Assad was an route to Riyadh where he conferred with King Khalid and other Saudi Arabian leaders.

The diplomatic swirl was scheduled to continue Friday, with Hussein following Assad into Riyadh, the Syrian president flying on to the oil-rich state of Kuwait, and U.S. Secretary of State Cyrus Vance due to arrive here Friday night.

Observers here believe that Hussein and the Saudis are looking for some way to keep the split in Arab ranks from becoming permanent - and to rejoin teh negotiating process and keep Sadat from making a bilateral deal with Israel - without endorsing the Egytian president's methods.

Those methods include demonstrating to Arab opponents, who have what Sadat called "ailing minds" that the tide is running with him - especially since the Americans have given him their support and the Soviet Union has shown itself unable to deter him. The mass rally today in Gumhoarin Square and its saturation coverage by the media were part of that campaign.

Workers, student farmers, merchants, clerks and religious leaders from all over Egypt waved banners and placards praising Sadat and rejecting the policies of his opponents. They sang songs composed for the occasion comparing Sadat with the prophets of the past, and chanted slogans of peace.

"Down with the Syrian Baath party, " they chanted. "Freedom and dignity for Egypt." "Soldiers of Reconstruction, Support the Hero of Peace," read big yellow banners from the country's leading construction company. "Sadat, We Defend You With Our Blood," said others.

The president, who by all accounts has tapped a deep, rich vein of popular desire for peace among Egypt's impoverished masses as well as among intellectuals, said little new in his brief address.

But he demonstrated once again that his country, which views itself as the spiritual heartland and political leader of the Arab world, is going ahead with the new course he has charted for it. Without saying so officially, Sadat has consigned to history the era in which Egypt subordinated its national interests to the will-o-the-wisp of Arab solidarity or what are seen here as the irridentist dreams of others who want Egypt to fight for them.

Knowledgeable Egyptians say that on these occasions, the government helps its own cause by arranging trasportation a and providing pocket money for Egyptians who want to come here to participate. But no one is obliged to turn out, and the enthusiasm of those who do come is not feigned.

Cairo Radio and some newspapers let their enthusiasm overcome their objectivity in reporting crowd estimates up to four million. But high-ranking officials of the Ministry of the Interior put the figure at a still impressive quarter million, and untold tens of thousands more all over the country took the day off from work to watch on television.

The crowd began cheering as Sadat's helicopter landed and continued cheering as he and the top officials of his government appeared on the balcony for the speech. The president got no further than his opening words, "In the name of Allah," when he was cut off by more cheers.

Doves of peace fluttered skyward and police lined up six deep to hold back the surging throng as Sadat told them "In these historic moments, we shall rise above those dwarfs and we shall rise above the wounds they are trying to inflict on us so that we may establish a peace based on justice and affection - not on hatred."