Is Conventional Moral Reasoning based on what someone thinks is right or wrong (internally) or what his reference group has determined what the norm that should be followed is?
Kind of a combination of both. According to Kohlberg, the Conventional Moral Level reflects our growth into higher levels of thought processing. Like our perspectives on politics, religion, or any other socio-cultural topic, we are influenced by those with whom we spend the most time. Typically, this is our family, peers, and close affiliations. So if our family values religion, the beliefs of our respective religion will guide our perspectives (and actions). As we grow older, we start to consider alternatives. Though we may still stick to our original guidelines, post-conventional thought may tend to be more independent.
Hope this helps a bit.