Throughout many of the plagues God made a distinction between the Egyptians and the Israelites. He was trying to teach Pharaoh that the plagues were not just arbitrary, but a cry for freedom for the slaves of Egypt. God is also trying to teach the Israelites that they are His chosen people, that He loves them (though they have been slaves for 400 years), that He sees them and will ransom them. He is trying to grow their identity beyond slavery – God is for them.
This does not mean that God does not love the Egyptians – He loves all people, and some Egyptians even left with the Israelites on the Exodus. The Bible teaches again and again, though, that God calls a special group of people to reach the world. This group has a mission in the world – to bring people closer to God; they act as emissaries. God works with this people in a special way – revealing His Word (so they can tell others), guiding them (so they can grow strong for Him), and protecting them (so that His plan will not fail). Others can join this group of people – it is not exclusive, in fact this group is meant to grow bigger and bigger.
People often struggle with the concept of the People of God – as if God only loves this group of people. It is the opposite – God loves all people, and has called a special people to extend that love and His truth to the world. As the church we must never forget our mission.