The main thing that jumped out at me about this aliyah is the fact that, for all that God is supposed to be angry at Moses for lack of faith in the people, it really seems to me that God is the one who lacks faith. He tells Moses that if “they do not believe you or pay heed to the first sign (turning the rod into a snake), they will believe the second (the hand in the robe turning leprous). And if they are not convinced by both these signs and still do not heed you,” then Moses is to do the Nile-into-blood trick, although only with some water on the ground, not the whole river, which is much more impressive.
As for the reason why Moses is doing “Egyptian magic tricks,” which came up in our beit midrash last week, obviously he has to show the Hebrews that he can meet their oppressors on their own turf, as it were. Also, as someone else pointed out, the Hebrews have been part of that culture for quite a while, if not necessarily 400 years, so it makes sense that they would be impressed by the same things.