The parsha tells us (Shemos 12:38) that when Bnai Yisroel left Mitzrayim a tremendous group of converts left with them. The Midrash explains that this was Moshe Rabbeinu's original idea; Hakodosh Boruch Hu did not instruct him to gather these geirim. Following the cheit ha'eigel (Shemos 32:7) Hashem tells Moshe Rabbeinu to go down from Har Sinai because "your nation" has sinned. Rashi (ibid) quotes from the Midrash that Hashem's choice of words - "your nation" - alludes to the eiruv rav (the aforementioned group of converts) since Hashem would not refer to the Jewish people as "your" nation but rather as "my" nation. Apparently it was Moshe Rabbeinu's idea to accept all these converts.
Moshe Rabbeinu was told in advance (Shemos 3:12) that yetzias Mitzrayim is going to lead up to ma'amad Har Sinai, and apparently he felt that it would be much more honorable ("b'rov am hadras Melech") if there would be throngs of people present at Har Sinai for the gilui Shechina. His decision turned out to be detrimental to the Jewish people because this group - the eiruv rav - were the ones who instigated the cheit ha'eigel as well as other troublesome incidents during the forty years of travelling in the midbar.
The institution of geirus was not originated by Moshe Rabbbeinu. Already when Hashem chose Avrohom Avinu to be the founder of a new nation He notified him that members of a different race would be able to convert and join the Jewish people (see commentary of the Rashbam to Breishis chapter 12:2-3). Indeed, the Torah tells us that when Avrohom Avinu moved to Eretz Yisroel he brought with him many converts (see Breishis 5:12). Rashi quotes the tradition from the Midrash that Avrohom Avinu was active in converting men and Sara Imeinu was active in converting women.
Even though the halacha of geirus was known from the very beginnings of the Jewish people, it was not right for Moshe Rabbeinu to make the decision to accept the eiruv rav without consulting Hashem first. Very often a halacha appears "on the books" and is explicit in the Shulchan Aruch without any dispute but it is still a mistake to make a major innovation in Jewish observance based on any halacha without consulting gedolei Torah. A very sad example of this is well known: at the beginning of the reform movement in Germany, a group of well-meaning rabbis felt that since the masses did not understand Hebrew it would be beneficial to have the tzibbur daven in German. The Shulchan Aruch does in fact quote from the Gemorah that the tefilla which is offered by the tzibbur may be recited in the vernacular. The gedolei Torah of that generation were not consulted and were all opposed to this new innovation for various reasons, and we know what terrible results came about because of that innovation.
Moshe Rabbeinu's idea that having a much greater crowd present at Har Sinai would enhance Kovod ha'Shechina was apparently not so compelling. True, we have a principle that "b'rov am hadras Melech", but on the other hand being overly inclusive runs the risk of lowering the level of religious intensity. The nevi'im tell us that l'osid lovoh, there will be a fulfillment of the theme of malchiyos, i.e. that all of mankind will recognize Hashem, but we are not yet living in the time of l'osid l'ovoi. The novi Yeshaya said (54) that the day will come that the barren woman will give birth to many children and will be rejoicing. This is a reference to the fact that the Jewish people will return to Eretz Yisroel and will become very great in numbers. The Gemorah (Berachos 10a) tells us that on one occasion an apikores confronted Bruria, the wife of R' Meir, regarding the meaning of that posuk. The apikores understood the posuk to mean that the barren woman (the Jewish people) rejoices because she has no children, and therefore the apikores challenged that this does not make any sense - why should a barren woman rejoice over the fact that she has no children? Bruria responded, accepting this additional level of interpretation of the apikores (that the barren woman will rejoice over the fact that she has no children), by explaining that the Jewish people rejoice in the fact that they are still small in number. If we would be much greater in numbers this would certainly lower the level of the religious observance of the masses. (This is, in brief, a famous drosha delivered by Rav Soloveitchik on the gemorrah in Berachos about "roni a'kora".)
We were told in advance by the nevi'im that over the course of the years of galus many Jews will assimilate and be lost to our nation. We try to do whatever we can in the area of kiruv to keep all Jews within the Orthodox fold; but we don't fall to pieces over this loss of numbers.
Many in our generation make the same mistake that Moshe Rabbeinu made and think that it is important to have large numbers of Jews, and therefore try to be lenient and water down the mitzvos a bit so observance should be more appealing to the masses. Moshe Rabbeinu was told by Hashem after the chet ha'eigel that this attitude is improper.