Palestinian guerrilla leader Yasser Arafat received an emotional welcome from Arab leaders here today as he arrived for a crucial conference of the Arab League.

The major business of the meeting was to work out a common Arab position toward Israel's invasion of Lebanon and President Reagan's new Middle East peace initiative.

Arafat was greeted by Moroccan King Hassan, who gave him a royal reception and a 21-gun salute normally reserved for chiefs of state.

He then went to the airport VIP lounge where 12 other Arab kings, sheiks and presidents embraced and kissed him after his 10-week-long battle against Israeli forces besieging Beirut.

Among them were King Fahd of Saudi Arabia, King Hussein of Jordan, President Jafar Nimeri of Sudan and the ruling sheiks of the Arab states of the Persian Gulf.

Conspicuously absent from the welcoming ceremony was Syrian President Hafez Assad, apparently miffed at Arafat's refusal after leaving Beirut to go directly to Damascus or establish his new headquarters there.

With the unexpected arrival of Iraqi President Saddam Hussein late this afternoon and of the South Yemeni leader Mohammed Ali Nasser last night, 15 Arab leaders now are assembled here together plus lower-ranking delegations from five other countries in the 22-member Arab League.

Major leaders absent included Libya's Muammar Qaddafi, who is boycotting the summit, and Egypt's Hosni Mubarak, whose country was expelled two years ago after signing a peace treaty with Israel.

The summit opened tonight with a brief speech by King Hassan, its host and chairman. He had little to say other than that all discussions would be held behind closed doors.

The summit is expected to concentrate mostly on a detailed discussion of two Arab peace proposals, both of which involve recognition of Israel while at the same time calling for the establishment of an independent Palestinian state in the Israeli-occupied West Bank and Gaza.

The meeting is a resumption of a summit that broke up in disarray here last Nov. 25 after only four hours of discussion over the eight-point peace plan submitted by Fahd. The main criticism was the plan's implicit recognition of Israel.

In addition to reconsidering the Fahd plan, Arab leaders now have before them a proposal by Tunisian President Habib Bourguiba that makes explicit Arab recognition of Israel and calls for the creation of a Palestinian state alongside the Jewish one on the basis of the 1947 U.N. partition resolution.

From a discussion of these two proposals is likely to emerge the Arab response to President Reagan's call for a Palestinian self-government in the West Bank and Gaza Strip in "association with Jordan" instead of the establishment of an independent Palestinian state.

Before coming here, Arafat said the PLO leadership had studied "the balance sheet of the ups and downs" of the Palestinian revolution to date and that he would make public its views during the summit.

"We shall present to the Fez summit in all honesty and sincerity our viewpoint in the name of the blood that was shed and the struggles that we have led to defend not only Palestine and Lebanon but the whole Arab nation," he was quoted as saying in Tunis.

Meanwhile, warnings that another failure of the summit here would be disastrous to the Arab cause came from several Arab states, including Lebanon, Syria and Saudi Arabia.

The state-controlled newspaper Tichrin in Damascus commented that the Arab world was destined to become "the theater of serious events with incalculable consequences" if no agreement is reached here among Arab leaders.

Lebanon's Foreign Minister Fuad Boutros said in an interview in Beirut that a failure here would have "lasting negative consequences on Arab relations." In Saudi Arabia, Information Minister Abou Yamani issued a similar warning.